Americans are gaining faith that the economy is on the upswing.
An improving job outlook helped the Consumer Confidence Index soar to the highest level since April and near a post-recession peak, according to a monthly survey by The Conference Board.
It marked the second straight monthly surge and coincided with what's wrapping up to be decent spending for the holiday shopping season.
The rise in confidence jibes with a better outlook for the overall economy. According to an Associated Press poll of three dozen private, corporate and academic economists, the U.S. economy will grow faster in 2012 — if isn't derailed by upheavals in Europe.
But confidence is still far below what's typically seen in a healthy economy. And Americans' mood could sour again if they start to feel more nervous if the debt crisis in Europe deepens and spreads to the U.S. On top of that, shoppers still face big obstacles — higher costs on household basics and a still-slumping housing market.
"This is encouraging. It's good to be talking about improvement," said Mark Vitner, an economist at Wells Fargo. "But there is still a lot of room for trouble."
The New York-based Conference Board said Tuesday that its Consumer Confidence Index rose almost 10 points to 64.5 in December, up from a revised 55.2 in November. Analysts had expected 59. The level is close to the post-recession peak of 72, reached in February.
The surge in December builds on a big increase in November, when the index rose almost 15 points from October. That month's reading was the lowest since March 2009, when the index was 26.9, having begun a fitful recovery from its all-time low the month before of 25.3.
One component of the index that measures how shoppers feel now about the economy rose to 46.7, up from 38.3 in November. The other barometer, which measures how shoppers feel about the next six months, rose to 76.4, up from 66.4.
In particular, shoppers' assessment of the job market improved, according to preliminary results of the survey, which was conducted Dec. 1-14. Those anticipating more jobs in the months ahead increased to 13.3 percent from 12.4 percent while those anticipating fewer jobs declined to 20.2 percent from 23.8 percent.
Economists watch the confidence numbers closely because consumer spending — including items like health care — accounts for about 70 percent of U.S. economic activity.
Americans have more reason to be optimistic as the year ends. The economy has produced at least 100,000 new jobs for five months in a row, the longest such streak since 2006. The number of people applying for unemployment benefits has dropped to the lowest level since April 2008.
According to the AP poll of economists, conducted from Dec. 14 through 20, the U.S. economy is expected to grow 2.4 percent next year. In 2011, it likely grew less than 2 percent. The economists expect the country to create 177,000 jobs a month through Election Day 2012. That would be up an average 132,000 jobs a month so far in 2011.
But shoppers still face many hurdles. In fact, while the job market is steadily improving, unemployment — at 8.6 percent — is still high. And housing remains wobbly. The Standard & Poor's/Case-Shiller index of home prices, also released Tuesday, dropped in October in 19 of the 20 cities it tracks. It was a second straight declining month, further evidence of a bumpy housing recovery
Lynn Franco, director of The Conference Board Consumer Research Center, noted renewed fears about a second recession hurt confidence last summer.
"While consumers are ending the year in a somewhat more upbeat mood, it is too soon to tell if this is a rebound from earlier declines or a sustainable shift in attitudes," Franco. "Have we rebounded from a summer lull or are we turning the corner?"
In fact, even with the increase in confidence, shoppers have been focused on deals this holiday season. Shoppers, enticed by expanded hours and bargains, packed stores for the start of the holiday season, resulting in discount-fueled record spending, but then retreated for a few weeks to wait for better deals.
Based on a stronger-than expected start and rising optimism that more spending was to come in the finale, The National Retail Federation upgraded its holiday sales growth forecast to 3.8 percent, from the original forecast of 2.8 percent made in September. More data will be released this week that will help quantify the last-minute sales surge.
Of course, the big question is how all the discounting will affect stores' profit margins. But in one good sign, Roxanne Meyer, a retail analyst at UBS Investment Research, says that overall post-Christmas markdowns were not as deep as expected, with less than half of major retailers increasing promotionals from last year.
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