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Tuesday
Jan112011

Consumer Confidence Jumps to Two-and-a-Half-Year High

Photo Courtesy - Getty Images(NEW YORK) -- Consumer confidence jumped to its highest level in more than two and a half years this week, led by improved ratings of the buying climate and national economy.

The Consumer Comfort Index advanced by five points, a sharp one-week gain that’s been matched or exceeded only 24 times in more than 1,300 weeks of ongoing polling since late 1985. It follows a mid-December drop in economic pessimism, measured separately, to a six-year low.

Shifts this big do not always mean continued improvements in consumer sentiment down the road. But one particular data point offers hope: A five-point jump in the CCI in March 1993 marked the start of the index’s climb out of the 1990-91 recession and its hangover. Still, it was a long road; the CCI didn’t regain its pre-recession level until November 1994.

This advance follows last week’s report that unemployment fell to 9.4 percent in December, its lowest since July 2009. That in turn followed a dip in weekly initial unemployment claims for the last week of December to their lowest since July 2008. (Last week’s report, though, worsened.) As noted last week, the CCI correlates closely with unemployment as well as with a variety of other indicators. (One, the Dow Jones Industrial Average, rose 11 percent last year.)

This week’s jump in confidence occurred chiefly among groups that often are hit hardest by unemployment. The CCI reached its best in more than two and a half years among adults who are under age 34, singles and Democrats, and also has risen among unmarried adults, renters and low-earners. It’s matched a two-and-a-half-year high among women as well.

The CCI, produced by Langer Research Associates, is based on Americans’ ratings of the current national economy, the buying climate and their personal finances.

Copyright 2011 ABC News Radio

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