U.S. consumer confidence jumped to a 17-year high as optimism about employment prospects grew and Americans began seeing additional money in their paychecks from recently enacted tax cuts, data from the New York-based Conference Board showed Tuesday.
The confidence index rose to 130.8 (est. 126.5), the highest since Nov. 2000, from a downwardly revised 124.3 in January. The present conditions measure climbed to 162.4, the highest since 2001, from 154.7. The consumer expectations gauge increased to three-month high of 109.7 from 104.
The report reflects increased confidence in employment and incomes, which could support consumer spending. The labor differential, which measures the gap between respondents saying jobs are plentiful and those who say they’re hard to get, rose to 24.7 percentage points, the highest since 2001.
Recent tax legislation signed in December may have also buoyed sentiment, as many Americans saw bigger after-tax paychecks in February due to the law. That may have helped consumers shrug off the early-February 10 percent decline in stock prices, which have since recovered most of their losses.
“Despite the recent stock market volatility, consumers expressed greater optimism about short-term prospects for business and labor market conditions, as well as their financial prospects,” Lynn Franco, the Conference Board’s director of economic indicators, said in a statement. “Overall, consumers remain quite confident that the economy will continue expanding at a strong pace in the months ahead.”
The share of respondents expecting stock prices to increase in the year ahead fell to 41.3 percent from a record 51 percent; 25.8 percent of consumers said they expect better business conditions in the next six months, up from 21.5 percent in the previous month. The share of households who expect incomes to rise in next six months rose to 23.8 percent, the highest since 2001, from 20.6 percent. Buying plans for homes, major appliances and new cars have all increased.