|Consumer confidence gets a boost due to 'improving expectations'|
|Written by Eric Tiansay|
|Wednesday, 28 August 2013 02:14 PM EDT|
Consumer confidence moved closer to a five-and-a-half-year high this month due to growing optimism that hiring and wages could pick up in coming months, according to the Conference Board.
The private research group said its index of consumer confidence rose to 81.5 in August—just below the 82.1 reading in June, which was the highest since January 2008.
"Consumer confidence increased slightly in August, a result of improving short-term expectations," said Lynn Franco, director of economic indicators and surveys of the New York City-based Conference Board. "Consumers were moderately more upbeat about business, job and earning prospects. In fact, income expectations, which had declined sharply earlier this year with the payroll tax hike, have rebounded to their highest level in two-and-a-half years."
Although consumers were more confident about the future, their assessment of the current economy dipped slightly in August.
"Consumer sentiment is holding steady, supported by advances in stocks, solid job creation and a broad-based recovery in the housing market," said Jim Baird, chief investment officer at Plante Moran Financial Advisors, Associated Press (AP) reported.
Consumers' confidence in the economy is monitored closely because their spending accounts for about 70% of U.S. economic activity. After hitting bottom at 25.3 during the Great Recession in February 2009, the index has bounced back, but it has yet to reach a 90 reading, which signals a healthy economy.
The economy has created an average of 192,000 jobs a month this year, slightly ahead of last year's pace, while the unemployment rate fell last month to a four-and-a-half-year low of 7.4%, AP reported.