By Anna Louie Sussman
WASHINGTON -- Americans' optimism about the economy came roaring back in November, hitting a nine-year high as the economy heads into the key holiday shopping season.
The Conference Board said Tuesday its index of consumer confidence jumped to 107.1 in November after dropping to an upwardly revised 100.8 in October. Economists surveyed by The Wall Street Journal expected the index to rise to 101.8 in November.
Tuesday's report is "consistent with an improving labor market and solid growth in consumer spending," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics, Ltd.
The results showed consumers shrugging off uncertainty ahead of the U.S. presidential election, as most people in the survey were contacted before Nov. 8. A small sample of respondents was polled following the election, with a cutoff date of Nov. 15.
"Whether the increase reflects merely relief that it's over or joy on the part of Trump supporters is unclear, but the bottom line is that the index is now at its highest since July 2007," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Consumers' assessment of both current and future economic conditions strengthened over the month, with the present situation Index rebounding strongly to 130.3, from 123.1 in October. The expectations index hit 91.7, up from 86.0.
Consumers' outlook for the labor market also improved, with slightly more saying jobs were "plentiful" than in October. The monthly employment report will be released Friday by the Labor Department.
"November was a rare case when all of the various consumer confidence measures moved decisively in the same direction, which raises the likelihood that moods actually may have changed in a meaningful way," said Stephen Stanley, chief economist at Amherst Pierpont Securities.
Mr. Shepherdson said the expectations index's level is consistent with real consumer spending rising by about 3.5% annually, but he noted that pace of gains isn't sustainable relative to real income growth closer to 2.5%.
The survey showed consumers' expectations for inflation rates 12 months hence dropped to 4.7% from 4.8% in October, and down from 5.0% in September.
Economists track confidence because when consumers are upbeat, they are more likely to boost personal spending, which accounts for the bulk of the U.S. economy.
New figures on consumer spending showed it advancing 2.8% in the third quarter, according to revised figures released Tuesday by the Commerce Department. That helped drive U.S. gross domestic product to its strongest quarterly growth in two years.
The Conference Board's index had risen to 103.5 in September before dropping in October. That was consistent with rising personal spending and retail sales in September. Retail sales then posted another brisk gain in October. That suggests Americans had felt comfortable opening up their wallets for several months leading up to the U.S. election. A separate measure of consumer sentiment from the University of Michigan also showed sentiment rose in November.
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(END) Dow Jones Newswires
November 29, 2016 11:41 ET (16:41 GMT)
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