By Jim Puzzanghera, Los Angeles Times –
WASHINGTON—Despite Europe’s economic troubles, American consumers are feeling better about the economy than at any time since the start of the Great Recession.
Consumer confidence surged in May to its highest level since October 2007, the ninth-straight monthly increase, according to the latest Thomson Reuters/University of Michigan Survey of Consumers released Friday.
“Europe is in recession and China is slowing. … But the American consumer is unmoved. In fact, they are downright optimistic,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York. “Consumer confidence at a new high should make us more certain that the consumer will continue to lead this recovery going forward.”
More favorable outlooks on wages and jobs helped push the index to 79.3 in May, up nearly 4 percent from April’s 76.4. This month’s figure was up 6.7 percent from a year ago.
Consumer confidence has been rising since August, when it bottomed out at 54.9 amid the contentious debate over raising the national debt ceiling. That figure was the lowest reading since 1980.
The steady rise slowed to a crawl in April, with the index rising just 0.3 percent from March. But the outlook brightened significantly in May. The new reading topped figures from early 2011, when a similar boost in consumer confidence was derailed by high gas prices and economic turmoil abroad.
“Consumer confidence was nearly as high in the past two years before the gains were reversed,” said Richard Curtin, the survey’s chief economist. “The upbeat consumer reports on jobs could mean that more positive numbers will soon be reported by the government, or that consumers have yet again pushed their expectations beyond the likely performance of the economy.”
Curtin said job growth in coming months will determine whether consumer confidence continues to rise. A potential spillover in the U.S. of Europe’s economic problems barely registered on the radar of consumers.