(Bloomberg) — Consumer confidence increased in April to the second-highest level in more than eight years as Americans grew more upbeat about their financial prospects.
The University of Michigan said Friday that its final index for the month increased to 95.9 from 93 in March. The median projection in a Bloomberg survey of economists was for 96, little changed from the preliminary April reading of 95.9.
A stronger sense of job security and building momentum in wage growth are helping to buoy confidence, which may encourage consumers to spend rather than save their paychecks. Low fuel costs and continued labor market progress will help keep households upbeat even as the Federal Reserve considers raising interest rates for the first time since 2006.
“Confidence is down from its absolute high in the last couple months, but it still shows a clear net pickup recently,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York, said before the report. “The confidence numbers look consistent with consumer spending picking up.”
Estimates in the Bloomberg survey of 59 economists ranged from 93 to 97.5. The index average 84.1 last year.
The sentiment survey’s current conditions index, which takes stock of Americans’ views of their personal finances, rose to a three-month high of 107 in April from 105.
The measure of expectations six month from now increased to 88.8 from 85.3.
“Personal financial prospects have improved significantly,” Richard Curtin, director of the Michigan Survey of Consumers, said in a statement. “Financial gains were expected by 37 percent of all consumers in April. Although just above the 36 percent recorded in the prior two months, it was the highest proportion recorded since April 2007.”
Americans expected an inflation rate of 2.6 percent in the next year, down from 3 percent in March. Over the next five to 10 years, they also expect a 2.6 percent rate of inflation, compared with 2.8 percent in the previous month.
Friday’s consumer sentiment report is at odds with other figures released this week. The Bloomberg Consumer Comfort Index fell to 44.7 in the period ended April 26, the third consecutive drop, from 45.4 the prior week.
The Conference Board’s consumer confidence index dropped to a four-month low of 95.2 in April, weaker than the most pessimistic forecast in a Bloomberg survey of economists.
Fed policy makers are keeping an eye on consumer attitudes, inflation and other markers of economic health as they weigh the timing of their first increase in the benchmark interest rate since 2006. The outlook took a hit this week as a report showed the economy barely grew in the first quarter, expanding at a 0.2 percent annual rate after a 2.2 percent in the final three months of 2014.