Consumer confidence jumps in January

NEW YORK (CNNMoney) -- Americans were more optimistic about jobs and the overall economy in January, pushing the latest reading on consumer confidence to its highest level since May 2010.

The Consumer Confidence Index shot up to 60.6 in January, from 53.3 in December, the Conference Board, a New York-based research group that compiles the index, said Tuesday.

The jump far exceeded forecasts. Economists surveyed by Briefing.com were expecting the index to increase to 53.5.

"Consumers have begun the year in better spirits," said Lynn Franco, director of The Conference Board Consumer Research Center. "Consumers rated business and labor market conditions more favorably and expressed greater confidence that the economy will continue to expand and generate more jobs in the months ahead."

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.

The index is still well below a healthy reading. An overall reading above 90 indicates the economy is solid, and 100 or above indicates strong growth.

And while a higher number is a positive sign, the index has been volatile and economists are still waiting for a clear trend to emerge.

"The bottom line is, it's pretty good news," said Mike Schenk, senior economist with the Credit Union National Association. "On the other hand, we're a long way from feeling like happy days are here again."

Consumer confidence wavered throughout last year, plunging to a 17-month low of 48.6 in September.

Since then, end of the year stock market gains have helped fuel optimism, as have slight improvements in the job market, Schenk said. Workers were also happy to receive a 2% raise after President Obama signed a payroll tax holiday into effect at the end of the year, he said.