Despite Wall Street's recent volatility, it appears American consumers are feeling better about their economic prospects.
The Conference Board's latest Consumer Confidence Index shows that optimism about the economy hit a seven-year high in October. The business group points to several factors, including a better job market and improved business conditions, as contributing to that rise.
"Consumers have regained confidence in the short-term outlook for the economy and labor market, and are more optimistic about their future earnings potential," Lynn Franco, the Board's director of economic indicators, said in a statement. "With the holiday season around the corner, this boost in confidence should be a welcome sign for retailers."
The Board also notes a growing number of consumers expect overall business conditions to improve over the next six months, while those expecting business conditions to deteriorate fell significantly, from 11.4 percent to 9.3 percent.
The improved economic outlook appears to be broad-based, but analysts say we shouldn't forget that falling gas prices have also helped put many Americans in a better mood when it comes to their personal finances.
"Pump price relief to lower- and middle-income households is a driver of consumer confidence and consumer spending," IHS economist Chris Christopher Jr. said in a note to investors.
Paul Dales, senior U.S. economist at Capital Economics, believes consumer confidence could rise further in November.
"The obvious conclusion," he wrote in a note to clients, "is that the boosts to confidence from the continued strength of the labor market and the further fall in gasoline prices have more than offset the drag from the recent decline in equity prices."
Not all the economic indicators are pointing upwards. The Commerce Department reports spending on non-defense, U.S-made capital goods -- the assets used to create other goods -- fell 1.7 percent in September, its biggest decline in eight months. And a closely watched monitor of home prices notes that, while the national index increased for an eighth straight month, price gains have been decelerating.
"The weak capital goods orders and house price data confirm the slowdown in activity," Millan Mulraine, deputy chief economist at TD Securities told Reuters, "but the burst in consumer confidence suggests that U.S. households are very optimistic about the outlook."