Americans' confidence in the economy rose in April to the highest level since September 2008, just as the financial crisis escalated, according to a private research group.
The upbeat reading, combined with upbeat earnings reports this week from companies ranging from Whirlpool Corp. to UPS Inc., offers more hope the economic recovery is gathering steam.
The Conference Board, a private research group based in New York, said Tuesday that its Consumer Confidence index increased to 57.9, up from a revised 52.3 in March. The April reading is the highest since September 2008's 61.4, before going into freefall. Economists surveyed by Thomson Reuters were expecting a reading of 53.5.
The index — which measures how shoppers feel about business conditions, the job market and the next six months — had been recovering fitfully since hitting an all-time low of 25.3 in February 2009.
Economists watch the number closely because consumer spending including healthcare and other major items, accounts for about 70 percent of U.S. economic activity.
April's reading is still far from what's considered healthy. A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth. Still, the monthly survey of consumers showed that consumers' current and short-term concerns about jobs and the overall economy are easing.
One component of the overall index, which assesses how consumers feel now about the economy, rose to 28.6 in April from 25.2 in March. The other component, which measures shoppers' outlook over the next six months, climbed to 77.4 from 70.4.
"Looking ahead, continued job growth will be key in sustaining positive momentum," said Lynn Franco, director for The Conference Board Consumer Research Center.
Economists believe confidence will remain relatively weak for at least another year because companies haven't begun to dramatically ramp up hiring.
Employers are expected to add 175,000 jobs in April, but economists project unemployment will remain at 9.7 percent. The Labor Department is due to release monthly job figures May 7.
Still, economists are more upbeat about growth prospects this year as industries increasingly report better profits and add new jobs, though they still anticipate the recovery to remain slow, a new survey by The National Associations for Business Economics showed Monday.
Seventy percent of those recently polled by NABE believe real GDP will increase by more than 2 percent this year, up from 61 percent who said the same in January. Twenty-four percent are projecting real GDP will rise by more than 3 percent.
Meanwhile, two bullish reports released Friday — one on manufacturing, the other on new home sales — offered signs that the recovery is accelerating, and many economists are raising the estimates for U.S. economic growth.
First-quarter earnings reports from big manufacturers including Caterpillar Inc. and Whirlpool along with Tuesday's upbeat forecast from UPS are underscoring that consumer demand is strengthening across all types of goods.
Still, the housing market is on tentative ground. The worry is that improvement in housing may not be sustained as government subsidies have helped fuel the recovery. In fact, demand for homes could decline again over the summer, preventing the housing sector from contributing much to the economic recovery.
Still, against this economic background, signs of life in consumer spending are sprouting this spring, and stores are primping for a recovery by increasing inventories and re-evaluating their marketing.
Retailers reported a 9 percent increase in sales at stores open at least a year for March, the biggest gain since March 1999, though much of that was a result of an earlier Easter that pushed more spending into March.
Sales at stores open at least a year are considered a key indicator of a retailer's health. March's performance marks the fourth consecutive month of sale gains.
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