NEW YORK, N.Y. - Americans are gaining faith that the economy is on the upswing. The monthly consumer confidence index surged to the highest level since April and is approaching a post-recession peak.
The New York-based Conference Board said Tuesday that its consumer confidence index rose almost 10 points to 64.5, up from a revised 55.2 in November. Analysts had expected 59. The level is close to the post-recession peak of 72, which the index reached in February.
The surge in December builds on another big increase in November, when the index rose almost 15 points from the month before.
One component of the index that measures how shoppers feel now about the economy, rose to 46.7, up from 38.3 in November. The other barometer, which measures how shoppers feel about the next six months, rose to 76.4, up from 66.4.
Improving confidence is in line with retail reports of a decent holiday shopping season.
Economists watch the confidence numbers closely because consumer spending — including items like health care — accounts for about 70 per cent of U.S. economic activity. Still, the December confidence reading is below the 90 level that indicates an economy on solid footing.
Analysts are cautious about whether the gains are the start of something more sustainable.
"While consumers are ending the year in a somewhat more upbeat mood, it is too soon to tell if this is a rebound from earlier declines or a sustainable shift in attitudes," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.
Even with the increase in confidence, shoppers are still nervous about their jobs and the overall economy according to the preliminary results of the survey, which ran Dec. 1-14.
Those claiming jobs are "plentiful" increased to 6.7 per cent from 5.6 per cent, while those claiming jobs are "hard to get" decreased to 41.8 per cent from 43.0 per cent. Those anticipating more jobs in the months ahead increased to 13.3 per cent from 12.4 per cent while those anticipating fewer jobs declined to 20.2 per cent from 23.8 per cent.
That's because while the job market is steadily improving, unemployment — at 8.6 per cent — is still high. And housing remains wobbly. The Standard & Poor's/Case-Shiller index of home prices, also released Tuesday, dropped in October in 19 of the 20 cities it tracks. It was a second straight declining month, further evidence of a bumpy housing recovery.
Heading into the holiday season, store executives were nervous about consumers' willingness to spend. Merchants offered big discounts on holiday merchandise and lured shoppers with expanded hours.
After a record spending spree over Thanksgiving weekend, the season's semi-official start, shoppers retreated for a few weeks. Then stores saw a surge of shopping the week before Christmas as consumers took advantage of better discounts.
The National Retail Federation now expects a 3.8 per cent increase in holiday sales, up from its original forecast of 2.8 per cent made in September when the economy's recovery looked more uncertain. More data will be released this week that will offer more clues about stores' last-minutes sales surge before Christmas.