Consumer confidence highest in 5 months

By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- Optimism about the U.S. economy grew in November, pushing the latest reading on consumer sentiment to the highest level since June -- ahead of the holiday shopping period.

The Consumer Confidence Index rose to 54.1 in November, up from a negatively revised 49.9 in October, the Conference Board, a New York-based research group that compiles the index, said Tuesday.

Economists were expecting the index to increase to 52, according to a Briefing.com consensus. The figure, which is based on a survey of 5,000 U.S. households, is closely watched because consumer spending makes up two-thirds of the nation's economic activity.

"Consumer confidence is now at its highest level in five months, a welcome sign as we enter the holiday season," said Lynn Franco, Director of The Conference Board Consumer Research Center. "Hopefully, the improvement in consumers' mood will continue in the months ahead."

Though consumers' assessment of the current state of the economy and job market only rose slightly from the prior month, their outlook for the next few months improved to the highest level since May.

The report showed that the expectations component jumped to 74.2 from 67.5 in October, while the present situation measure rose to 24 from 23.5.

The expectation's index is closely linked to stock prices, said chief U.S. economist Ian Shepherdson of High Frequency Economics, so the spike is likely thanks to improved performance of the market. Stocks began to recover in July and delivered strong gains in September in October.

The percentage of Americans expecting business conditions to pick up over the next several months increased to 16.7% from 15.8% last month, and fewer expected circumstances to worsen.

Consumers were also more positive about job prospects, with 15.5% expecting more jobs in the months ahead, up from 14.5%. And over 10% are anticipating a boost in their incomes, according to the report.

Shepherdson expects the consumer outlook for the economy to continue to improve next month.

"Confidence still remains weak by historic standards, but it is at least now heading in the right direction again," he said.

Sluggish job market and business conditions have dragged the index to a painfully low level. Though the overall index has recovered since reaching a record low of 25.3 in February 2009, it remains volatile and far from a reading above 90, which indicates the economy is stable.

A reading of 100 or above indicates strong growth, and the index has not reached that level since mid-2007.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,982.59 22.02 0.13%
Nasdaq 4,444.91 -4.65 -0.10%
S&P 500 1,978.91 0.57 0.03%
Treasuries 2.49 0.02 0.89%
Data as of 7:12pm ET
Company Price Change % Change
Apple Inc 99.02 1.35 1.38%
Facebook Inc 74.92 -0.27 -0.36%
Bank of America Corp... 15.50 -0.09 -0.58%
Dollar Tree Inc 54.87 -0.08 -0.15%
Family Dollar Stores... 75.74 15.08 24.86%
Data as of 4:03pm ET

Sections

Herbalife shares tumble after the maker of nutritional supplements reports earnings that fall short of analysts' estimates. More

New annual report from U.S. government shows the long-term prognosis for Medicare has improved thanks to slower health spending, while the outlook for Social Security remains unchanged. More

Online dating site OkCupid found its users were more likely to have conversations when it told them they were more compatible than in reality. More

Actor-founded This Bar Saves Lives had Hollywood connections, but learned Start-Up 101 the hard way. More

Steve Mason, a pastor from California, inherited more than $100,000 in student loan debt when his 27-year-old daughter died suddenly in 2009. With interest and late penalties, the debt has since ballooned to $200,000. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.