American consumers were happier in May than have been in almost six years with their view of current and future economic prospects rising to pre-recession levels.
The University of Michigan preliminary reading for overall consumer confidence jumped to 83.7 from 76.4 in April, well ahead of analysts' 78.0 forecast. It was the best reading since July 2007.
The gauge of current conditions climbed to 97.5 in May from 89.9, the best score since October 2007. Consumer expectations for their economic status in six months rose to 74.8 from 67.8, a six month high.
In another sign that the economy continues to improve, the index of leading indicators rebounded from its March decline to the best level since December 2011.
The Conference Board’s measure of the economic outlook in the next two quarters increased 0.6% in April following March's revised downwardly revised -0.2%. Economistss had forecast a 0.2% score.
Seven of the ten components of the index were positive additions, including equity prices, building permits, housing and jobless claims in the first week of May.
Yields on the 10-year Treasury, also a component of the index, have risen 19 basis points in the past month, indicating that the credit markets are anticipating a stronger economy in the near future, despite some weak or stationary economic statistics.
Markets are even beginning to anticipate a possible end to the Federal Reserve’s $85 billion a month quantitative easing program. Yesterday John Williams the President of the San Francisco Fed said that if the economy continues to improve the central bank could begin to curtail its securities purchases as early as the summer.
Chief Market Strategist