WASHINGTON - U.S. consumer confidence has risen to its highest point since August on the strength of a brighter view of the job market and business conditions.
The Conference Board, a business
research group, said Tuesday its consumer confidence index rose to 80.7 this
month from a December reading of 77.5. It was the second consecutive strong
"Confidence appears to be back on
track and rising expectations suggest the economy may pick up some momentum in
the months ahead," said Conference Board economist Lynn Franco.
Consumer confidence is closely watched
because consumer spending accounts for 70 percent of U.S. economic activity.
Amna Asaf, an economist at Capital
Economics, said the January improvement was encouraging given the unseasonably
cold weather during the month. She said it probably reflected the strong stock
market gains that were occurring during the survey period, which ended on Jan.
But she cautioned that the confidence
gauge could retreat in the February reading if stock prices don't rebound from
their recent declines.
For 2013, the confidence gauge
averaged 73.3, the highest since 2007. That's above the 45.2 average in 2009
when the economy was in recession for half the year. But it is still below the
reading of 90 that economists view as consistent with a healthy economy.
The unemployment rate fell to a
five-year low of 6.7 percent in December, down from 7 percent in November. But
the improvement came for the wrong reason. Many Americans gave up looking for
work and were therefore not counted as unemployed. Job growth also slowed in
December with employers adding just 74,000 jobs.
But economists believe that slowdown
was a temporary blip from what they are expecting to be a strong job
performance in the coming year, reflecting increased strength in the economy.
Many analysts are forecasting that the
overall economy will grow at around 3 percent in 2014, up a full percentage point
from 2013 growth. The federal government is expected to be less of a drag on
activity this year.