Consumer confidence unexpectedly increased in July to the highest level in six years as Americans’ views of their finances improved.
The Thomson Reuters/University of Michigan final index of consumer sentiment advanced to 85.1 in July from 84.1 at the end of June. Economists in a Bloomberg survey called for 84, according to the median projection after a preliminary reading of 83.9.
An increase in personal wealth tied to higher property values and stock portfolios is keeping confidence elevated and consumers spending. Stronger finances, along with job gains that have picked up from the second half of 2012, are also helping blunt the effects of higher payroll taxes.
“With the employment story improving, I think we should see continuing improvement in consumer confidence and that should boil through the economy,” Jerry Webman, chief economist at Oppenheimer Funds Inc. in New York, said before the report.
Estimates of the 63 economists in the Bloomberg survey ranged from 83 to 86. The index is close to the average of 89 in the five years leading up to the last recession that began in December 2007. During the 18-month slump that ended in June 2009, the gauge averaged 64.2.
Today’s figures compare with the weekly Bloomberg Consumer Comfort Index which rose last week to match its highest level since January 2008. The Bloomberg gauge improved to minus 27.3 in the period ended July 21 from minus 28.4.
Current Conditions
The Michigan survey’s current conditions index, which takes stock of Americans’ view of their personal finances, climbed to a six-year high of 98.6 in July from 93.8 last month. The preliminary July figure was 99.7.
The index of expectations six months from now fell to 76.5 this month from 77.8 in June. The preliminary July reading was 73.8.
The consumer sentiment measure has increased since the end of last year, when it stood at 72.9. More optimism is translating into higher sales at companies such as US Airways Group Inc.