WASHINGTON – Consumer confidence rose in April to a nine-month high, showing that Americans are growing more upbeat about the economy as the labor market gains traction.
The Thomson Reuters/University of Michigan final index of sentiment increased to 84.1 from a four-month low of 80 in March. The median projection in a Bloomberg survey of economists called for 83 after a preliminary April reading of 82.6.
As smaller ranks of the unemployed, near-record stock prices and higher property values help bolster household finances, consumers grew more optimistic about current conditions than at any time since July 2007.
Further strides in the labor market that generate bigger wage gains would provide additional impetus for the consumer spending that makes up almost 70 percent of the economy.
Things are getting better, Michael Gapen, a senior U.S. economist at Barclays in New York, said before the report.
Some of the economy’s headwinds, such as inclement winter weather and last year’s government shutdown, are starting to wane, and people are looking toward some pocketbook issues, he said.
The Michigan sentiment survey’s index of current conditions, which measures Americans’ views of their personal finances, advanced to 98.7 in April from 95.7 a month earlier. The initial April figure was 97.1.
The gauge of expectations six months from now increased to 74.7, the highest since July, from 70 last month.
The preliminary April reading was 73.3.
Friday’s data are in line with other readings on sentiment.
The Bloomberg Consumer Comfort Index climbed last week to its highest level since August as Americans were more upbeat about being able to provide for their families than at any time in six years.
Gains in sentiment are translating into stronger sales.
Cars and light trucks sold in March at a 16.3 million annualized rate, the fastest since May 2007, following a 15.3 million pace the prior month.
Sales at General Motors, Ford, Toyota, Nissan and Chrysler all topped analysts’ estimates.
Wage gains have been slower to materialize. Average hourly earnings increased 2.1 percent in March from a year earlier, close to the 2 percent average since the last recession ended in June 2009.