Powered by an improving job market and lower gasoline prices, consumer confidence rebounded sharply in October from the previous month’s dip, the Conference Board said Tuesday.
The research group’s index of consumer confidence rose to 94.5 in October, a healthy increase from September’s reading of 89.0, which had been a rare monthly decrease. The latest reading was the highest index reading since October 2007, shortly before the financial crisis unfolded.
“A more favorable assessment of the current job market and business conditions contributed to the improvement in consumers’ view of the present situation,” said Lynn Franco, director of economic indicators for the Conference Board. “Looking ahead, consumers have regained confidence in the short-term outlook for the economy and labor market, and are more optimistic about their future earnings potential.”
And that bodes well for the months ahead, she said, noting that with “the holiday season around the corner, this boost in confidence should be a welcome sign for retailers.”
Among the biggest surprises Tuesday was the survey of future expectations, which rose by a whopping 8.6 points to reach 95.0. Economists credited for this jump falling gas prices and more jobs available.
“Pump price relief to lower and middle income households is a driver of consumer confidence and consumer spending,” Chris Christopher, director of US consumer economics for forecaster IHS Global Insight, said in a note to investors. “We expect the surge in consumer confidence to assist in holiday retail sales growth this year.”
Added economists at RDQ Economics in New York, in an investment note, “Consumer confidence has been on a strongly rising trend and is now closing in on the area typically seen during the last expansion.”