Confidence among U.S. consumers unexpectedly jumped in October to the highest level since before the recession began five years ago, raising the odds that retailers will see sales improve.
The Thomson Reuters/University of Michigan preliminary October consumer sentiment index increased to 83.1, the highest level since September 2007, from 78.3 the prior month. The gauge was projected to fall to 78, according to the median forecast of 71 economists surveyed by Bloomberg News.
Rising stock and property values along with falling joblessness may keep giving Americans a psychological boost, brightening the household-spending outlook during the year-end holidays. Improving confidence may play a role in next month’s election as Republican challenger Mitt Romney tries to make a case for unseating President Barack Obama, a Democrat.
“It’s a combination of rising home prices and higher equities,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, whose forecast was the highest in the Bloomberg survey. “Consumers have, all things considered, been spending reasonably well.”
Estimates ranged from 75 to 81, according to the Bloomberg survey. The index averaged 64.2 during the last recession and 89 in the five years leading up to the 18-month economic slump that began in December 2007.