Consumer confidence has reached a 4-year high in May. It's the highest it has been since January 2008, reported Reuters on Friday. The survey, conducted by Thomson Reuters/University of Michigan, revealed that Americans seem to be "upbeat about the job market" while consumer "buying plans" also showed some positive indications that the economy may be recovering.
According to the "index on consumer sentiment" went from 76.4 in April to 77.8 at the beginning of May, rising above the projected 76.2. Regardless of the April 2012 job numbers that were released earlier this month, the survey revealed that twice the amount of consumers said they heard about surges in job availabilities, rather than "job losses."
Richard Curtain, director of the survey stated that the "data suggests that either more positive numbers on the labor market will be seen soon, or that consumers have ratcheted up their expectations too high." He added that "The most likely prospect is that job growth returns to a modest pace of gains and consumers trim their overly optimistic expectations, with not much change in overall confidence until after the November (presidential) election and the decisions on tax policy."
The survey also showed that consumers open to spending on "vehicles and durable goods" such as household appliances, electronics, and furniture, went up 65 percent. The enquiry also revealed that the yearly inflation expectation declined from 3.2 percent to 3.1 percent." This decrease Curtain indicated "is good news for the Fed. It gives them still room (to) maneuver in the year ahead."
The survey's results concerning "current economic conditions" also increased from 82.9 to 87.3, also reaching a four-year high. However, personal finance reactions by consumers continued to be bleak as only "29 percent of households" said that their finances were better or remained the same from a year ago.
Gus Faucher, a senior macroeconomist at PNC Financial Services in Pittsburg, told Reuters that "Households are feeling more comfortable. It's pretty good news for consumer spending," which may signal possible economic growth in the coming months.
As a result of a surge in consumer confidence, the report determined that "inflation-adjusted personal consumption expenditures can be expected to grow by 2.3% in 2012."
Another report released Friday showed "US producer prices" or the Producer Price Index (PPI) falling in April as energy prices declined. According to Reuters, this could be a sign that the Federal Reserve will have more of an opportunity to help the economy, if any other slumps in growth occur.
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