WASHINGTON — Consumer confidence rose more than forecast in January, reaching an eight-month high, as the outlook for jobs brightened.
The Conference Board’s sentiment index increased to 60.6 from 53.3 the prior month, figures from the New York-based private research group showed Tuesday. Another report showed home values dropped in November by the most in a year.
Growing optimism, an improving labor market and tax relief may combine to help spur consumer spending, which accounts for about 70 percent of the economy. At the same time, the absence of a sustained housing rebound and unemployment above 9 percent are among reasons the Federal Reserve may announce today it will stick to a plan for more stimulus.
“Consumers are seeing the true improvement in the labor market,” said Ryan Wang, an economist at HSBC Securities USA in New York. Nonetheless, “more progress is going to be needed to get the types of growth rates in both employment and spending that many are expecting to see this year.”
Economists had projected the confidence gauge would rise to 54, according to the median forecast in a Bloomberg News survey.
The share of Americans who said jobs were plentiful rose to the highest level since May 2009, while those expecting an increase in incomes climbed to an eight-month high. The proportion who expect their incomes to rise over the next six months increased to 11.4, the highest since May. The share of consumers who said jobs are currently plentiful rose a point to 5.2 percent.
Americans probably stepped up their purchases in the final three months of 2010. Consumer spending grew at a 4 percent annual pace, the fastest since the last quarter of 2006, according to the median estimate of economists surveyed by Bloomberg.
