Consumer outlook soars in July

In 3rd straight rise, index at highest point since October ’07

Employees at the new Hermes & Mauritz AB flagship store in New York look out from the store’s upper levels during a grand-opening ceremony July 17. The Conference Board said Tuesday that its consumer confidence index rose to 90.9 in July, the highest since October 2007, two months before the recession began.
Employees at the new Hermes & Mauritz AB flagship store in New York look out from the store’s upper levels during a grand-opening ceremony July 17. The Conference Board said Tuesday that its consumer confidence index rose to 90.9 in July, the highest since October 2007, two months before the recession began.

WASHINGTON -- U.S. consumers are more confident about the economy than they have been in nearly seven years.

The Conference Board said Tuesday that its confidence index rose to 90.9 in July from an upwardly revised 86.4 in June. The July reading is the highest since October 2007, two months before the recession officially began.

It was the third straight increase in the index. Economists said that strong job growth has helped improve consumers' assessment of current conditions and also improved their outlook on jobs and the economy.

"Americans felt a heck of a lot more confident in July," said Jennifer Lee, senior economist at BMO Capital Markets. She said that part of the confidence boost likely came from declining gasoline prices.

Conference Board economist Lynn Franco said that the improvements in consumers' confidence and expectations about the future indicate that the recent strengthening in overall economic growth should continue in the second half of the year.

"Employment conditions improved, gas prices are lower, equity markets remain robust and that's pretty much it," said Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York. "The fact that confidence is rising at a fairly steady rate implies that employment growth is going to continue at a fairly healthy rate."

Confidence has been rising since bottoming in February 2009 at 25.3. The index is now well above last year's average of 72.3 and with July's gain has now returned a level above 90, where it often hovered before the recession.

Consumers' attitudes are closely watched because their spending accounts for about 70 percent of U.S. economic activity.

For July, consumer assessment of the labor market improved, with those saying that jobs were plentiful -- increasing to 15.9 percent, up from 14.6 percent.

Consumers' expectations about the future were also more optimistic with those anticipating more jobs in the months ahead increasing to 19.1 percent, up from 16.3 percent in June.

The unemployment rate fell to 6.1 percent in June, the lowest level since September 2008. Employers added 288,000 jobs in June, marking the fifth straight month of job gains above 200,000. That is the best such stretch since the late 1990s tech boom.

Economists believe the job gains will continue in coming months and that that will help propel the economy to stronger growth.

"Stronger job growth helped boost consumers' assessment of current conditions, while brighter short-term outlooks for the economy and jobs, and to a lesser extent personal income, drove the gain in expectations," Lynn Franco, director of economic indicators at the Conference Board, said in a statement. The figures "suggest the recent strengthening in growth is likely to continue into the second half of this year."

In the January-March quarter, economic output went into reverse, falling at an annual rate of 2.9 percent. That big drop was blamed in large part on severe winter weather. Those conditions dampened everything from trips to the mall by shoppers to factory production.

The government will provide its first look at economic activity in the April-June quarter today, and economists are predicting a solid rebound to growth of around 2.9 percent. Analysts believe the economy will pick up even more momentum in the second half of the year, helped by further job gains providing people with more money to spend.

Information for this article was contributed by Martin Crutsinger of The Associated Press and Nina Glinski and Ainhoa Goyeneche of Bloomberg News.

Business on 07/30/2014

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