The holiday spirit appears to be boosting Americans' morale about the economy, as economic confidence just hit its highest level since mid-summer, a new survey shows.
Economic confidence continued to improve this month to reach -39 during the week ended Dec. 11, according to the latest Gallup poll. Although that's the best reading since July, it's still below year-ago levels. At this time in 2010, Americans' confidence in the economy stood at negative 32.
However, when taken with other measures of confidence, such as the most recent Thomson Reuters/University of Michigan consumer sentiment report, it's clear that consumers are now more optimistic than they have been in some time, writes Dennie Jacobe, Gallup's chief economist.
"Although not always the case, consumers often feel more optimistic around Christmas," Jacobe writes. "It appears that this was the case last year, as economic confidence improved to -20 by the week of Dec. 27 to Jan. 2. Even more impressively, the economic outlook dimension improved to -13 during that same year-ending week."
See the chart, courtesy of Gallup, below:
An improving stock market in early December and some optimism that Europe is beginning to address its sovereign debt crisis also may have helped lift Americans' confidence in the economy, Jacobe notes. Other probable causes, Jacobe reports: lower weekly readings on initial jobless claims and the government's report that the unemployment rate fell to 8.6 percent in November.
Whether that translates into strong holiday sales remains to be seen, Jacobe says. Retail sales rose 0.2 percent in November, the Commerce Department said Tuesday. The increase was lower than October's gain and also missed Wall Street's forecast.
"While improving economic confidence may not be enough to drive higher consumer spending on its own, it certainly provides the conditions that make it possible," Jacobe writes. "If economic confidence continues to improve in the next few weeks as it did last year, consumer spending during the Christmas holidays may well exceed that of a year ago."