American consumer confidence rose in May to the highest level in four years, according to the Thomson Reuters/University of Michigan preliminary reading of its consumer sentiment index.
The index, based on surveys of 500 households on their financial conditions and attitudes toward the economy, increased from 76.4 in April to 77.8, the highest level since January 2008.
On the plus side, 65 percent of respondents said that buying conditions were favorable, the highest level in more than a year. Consumer spending, which comprises 70 percent of the economy, could get a further boost from gas prices, which have leveled off or lowered in recent weeks.
Consumers’ assessment of current conditions, one of the index components, rose 4.4 points to 87.3. And despite the government’s disappointing April jobs report, nearly twice as many consumers reported hearing about new job gains than they have heard about job losses. Inflation expectations remain stable, at 3.1 percent for one-year expectations, down one tenth from April, and at 3.0 percent for 5-year expectations which is up one tenth.
(Concerns over inflation are on the rise in Millionaire households according to a first quarter wealth level study conducted by Millionaire Corner—64 percent, up from 55 percent in 2011).
On the down side, consumers were not all that optimistic about the decline in the unemployment rate to 8.1 percent, which analysts have largely attributed to disappointed job-seekers leaving the work force.
In other positive economic news, the Labor Department announced that it seasonally adjusted producer price index dropped 0.2 percent in April, the first decrease this year, and the biggest decline in six months.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.