Consumer confidence highest in three years

Consumer confidence highest in three years

Confidence among U.S. consumers increased in February to the highest level in three years according to the latest survey by the Thomson Reuters/University of Michigan survey company.

The survey showed that for the first time in six years households were more optimistic than pessimistic and that they intended to spend money in the months ahead.

There is clearly a bounce in the confidence numbers that coincides with the gains in financial markets and the pickup in the economy, particularly the improving labor market, Reuters said. The Reuters/University of Michigan report mirrors other consumer gauges, like the Bloomberg Consumer Comfort Index, which climbed last week to the highest level since April 2008 as Americans grew less pessimistic about their finances.

The confidence index often tracks changes in prices Americans pay at the gas pump, whereas changes in the stock prices have more of an influence on the Michigan index, according to economists.

Meanwhile, The Conference Boards index of confidence increased to its highest level since February, 2008, and the Commerce Department this week showed the economy grew at a 2.8 percent annual rate in the third quarter of 2010.

Also helping boost consumer confidence was an improvement in the unemployment rate, which fell to 9 percent, the lowest since April 2009. Unemployment had dropped to 9.4 percent in December from 9.8 percent the previous month.

Consumers in the confidence survey said they expect an inflation rate of 3.4 percent over the next 12 months, the same as in January.

Surveyors said rising gasoline prices may have restrained a further increase in consumer sentiment. The average price of a gallon of regular gasoline rose to $3.29 last week, the highest level since October 2008.