Americans' confidence rose to a five-month high in November amid more hopeful signs for the economy.
The report offered some comfort to U.S. retailers during the holiday shopping season, but shoppers still remain downbeat as they grapple with a high unemployment rate.
The Conference Board, a private research group based in New York, said Tuesday that its Consumer Confidence Index rose to 54.1 in November, up from a revised 49.9 in October.
The November reading is the highest since June, when the index stood at 54.3. Economists surveyed by Thomson Reuters expected 52.0.
September's index had been the lowest since February and was down sharply from 53.2 in August. It takes a level of 90 to indicate a healthy economy, which hasn't been approached since the recession began in December 2007.
One component of the index, how Americans feel now about the economy, rose to 24.0, up from 23.5. The other gauge, which measures how American feel about the economy over the next six months, rose to 74.2, up from 67.5 last month.
"Consumer confidence is now at its highest level in five months, a welcome sign as we enter the holiday season," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement. "Consumers' assessment of the current state of the economy and job market, while only slightly better than last month, suggests the economy is still expanding, albeit slowly. Hopefully, the improvement in consumers' mood will continue in the months ahead."
The index, which measures how respondents feel about business conditions, the job market and the next six months, has recovered fitfully since hitting an all-time low of 25.3 in February 2009. In October 2009, the index stood at 48.7. Since then, it has hovered in a tight range between the mid-40s and the high 50s. May 2010 was the only month when the index topped 60.
Economists watch confidence closely because consumer spending accounts for about 70 percent of U.S. economic activity and is critical to a strong rebound. But a rebounding job market is necessary for shoppers to feel like spending again.
There have been some encouraging signs. Americans' income rose 0.5 percent in October, boosted by a 0.6 percent rise in wages and salaries, according to a government report released last month. That was after incomes didn't rise at all in September.
At the same time, the pace of layoffs is slowing. Initial jobless claims dropped by 34,000 to a seasonally adjusted 407,000 in the week ending Nov. 20, the Labor Department said. Claims have fallen in four of the past six weeks.
Meanwhile, housing remains a drag, underscored by the latest report issued Tuesday. Home prices are falling faster in the nation's largest cities, and a record number of foreclosures are expected to push prices down further through next year, according to a widely watched housing index.
The Standard & Poor's/Case-Shiller 20-city home price index fell 0.7 percent in September from August. Eighteen of the cities recorded monthly price declines.