The Conference Board, a New York-based private research group, said Tuesday that its consumer confidence index rose in May to 76.2. That's up from a reading of 69.0 in April and the highest since February 2008.
The jump in confidence followed a separate report showing the housing recovery is strengthening.
Home prices jumped 10.9 per cent in March compared with a year ago, the most since April 2006, according to the Standard & Poor's/Case Shiller 20-city index. All 20 cities showed year-over-year gains.
The reports contributed to a strong opening on Wall Street. The Dow Jones industrial average surged more than 200 points in the first hour of trading. Broader indexes also jumped.
Consumers' confidence in the economy is watched closely because their spending accounts for about 70 per cent of U.S. economic activity.
Conference Board economist Lynn Franco said Americans are more optimistic after worrying earlier in the year about higher taxes and federal spending cuts.
Still, higher home prices and stocks gains are making Americans feel wealthier. That could offset some of the pinch from the tax increase and keep consumers spending.
And the job market has improved steadily over the past six months. The economy has added an average of 208,000 a month since November. That's well above the monthly average of 138,000 during the previous six months.
The unemployment has fallen to a four-year low of 7.5 per cent. Some of the decrease is because many people have given up looking for work. The government counts people as unemployed only if they are actively searching for a job.
The overall economy grew at an annual rate of 2.5 per cent in the January-March quarter, up from a rate of just 0.4 per cent in the October-December quarter. The fastest expansion in consumer spending in more than two years drove economic growth in the first quarter.
Many economists expect growth is slowing slightly in the current April-June quarter to a rate of between 2 per cent and 2.5 per cent. But there is hope among some economists that growth will strengthen in the second half of this year, boosted by the gains in housing and employment.