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Washington, D.C. -- The Conference Board report, released Tuesday, found that confidence among consumers rose to an eight-month high in December, increasing to 64.5 from a revised 55.2 reading in November.
The index reading exceeded all estimates in a Bloomberg News survey and was the highest since April.
Unemployment that dropped last month to its lowest in more than two years and the cheapest gasoline since February are prompting households to take advantage of discounts during the holiday shopping season. The improvement in sentiment may help sustain household purchases into the New Year.
“A large part of the problem in the economy is one of confidence, and to the extent that sentiment begins improving it would be a positive for growth,” Dana Saporta, director of U.S. economic research at Credit Suisse in New York, told Bloomberg. “There are still a lot of headwinds out there, including the continued decline in home prices.”
The median forecast of 69 economists surveyed by Bloomberg forecast the U.S. consumer confidence gauge would rise to 58.9. Estimates ranged from 52 to 63. The measure averaged 53.7 during the recession that ended in June 2009 and 98 during the economic expansion that ended in December 2007.
Other surveys have reflected similar gains in optimism. The Bloomberg Consumer Comfort Index improved to minus 45 in the period ended Dec. 18 from a reading of minus 49.9 the prior week, marking the biggest seven-day gain since January. The Thomson Reuters/University of Michigan index of consumer sentiment rose to a six-month high in December.
Holiday sales will rise 3.8%, compared with a 5.2% advance last year, according to the National Retail Federation.