WASHINGTON – A gauge on consumer sentiment in May reached the highest level since 2007, thanks to cheerier expectations and a rosier outlook on current economic conditions, according to data released Friday.
The final May reading of the University of Michigan and Thomson Reuters consumer-sentiment index jumped to 84.5 – the highest level since July 2007 – from 76.4 in April.
“The surge in consumer confidence is exactly the type of economic jump-start the Federal Reserve intended to result from its aggressive policies,” said Richard Curtin, the survey’s chief economist. “To be sure, consumers still expressed concerns with their financial prospects, especially about income gains over the longer term.”
A preliminary May reading pegged the gauge at 83.7. Economists polled by MarketWatch had expected a final May reading of 83.8, supported by higher stocks and a strengthening housing market.
“For the first time in five years, more consumers reported that their finances had improved rather than worsened, with recent income gains the most common reason,” according to the report.
Friday’s data echo a separate report earlier this week showing Americans were the most confident in five years.
According to the University of Michigan report, a gauge of consumers’ views on current economic conditions rose to 98 in May from 89.9 in April. Meanwhile, a barometer of their expectations increased to 75.8 from 67.8.
Elsewhere Friday, the U.S. Department of Commerce reported that consumer spending slowed down in April. But looking longer term, consumers and spending have held up better than economists had anticipated, given higher payroll taxes and fiscal uncertainty this year.