Consumer confidence rose in January to its best level since November of 2000, amid an improving view of both current and future circumstances, according to a report released Friday.
The University of Michigan’s consumer sentiment index moved to 103.8 at the end of January, compared with December’s reading of 92.6, according to those who had seen the subscriber-only report. The final January level also compares favorably with the preliminary 103.2 reading that was reported at mid-month.
Economists surveyed by Dow Jones Newswires and CNBC had expected the final January data would maintain most of the strength of the preliminary report. The median estimate of 16 forecasters was for a reading of 102.9.
The research group said its index of current conditions rose to 109.5 at the end of January, versus 97 in December. The preliminary January reading was 108.9. Meanwhile, the Michigan index on expectations, which covers consumers’ longer-term views, stood at 100.1 in January, compared to 89.8 in December, and 99.5 in the preliminary January data.
Consumer confidence gauges have improved over recent months, amid a surprising amount of volatility, particularly in the Michigan data. Their gains have followed the broader improvement in the U.S. economy over recent months, a recovery that economists and policy makers broadly expect will define the current year as well.
Earlier Friday, the government reported that the economy expanded at a 4 percent annualized pace in the fourth quarter, in its first estimate of growth for that period.
The January Michigan data is “constructive” for the economy, said Carey Leahy, economist with Deutsche Bank in New York. “Anything above 90 is good, anything above 100 is great,” Leahy said, adding he sees the data imparting some lift to consumer spending at the beginning of the year.
Earlier this week, the New York-based Conference Board reported in its monthly poll of consumer confidence that consumers’ views of the economy rose to their best showing since July 2002, even as those same households had a somewhat tentative estimate of the state of the labor market.
Generally, consumer confidence reports show at best a rough correlation with actual spending gauges. Fed officials have said it’s the latter factor they watch far more closely, given the role consumer spending plays in contributing to overall growth.
The University of Michigan report is based on a telephone survey of around 500 households.