U.S. consumers are feeling confident in the economy heading into the holiday season.
Consumer confidence surged from 86.9 to 89.4 in the Reuters/University of Michigan index released Friday morning, beating economists’ expectations.
Friday’s mark was the highest in the index since July 2007.
The Reuters/University of Michigan index, based on a nationally representative survey of 500 people, is viewed as a leading indicator of the economy and especially the willingness of Americans to spend on consumer items.
Friday’s release follows an encouraging report earlier in the morning on retail sales from the Department of Commerce. Total retail sales were up 0.3 percent in October, a headline number that understated consumption because of declining gas prices.
Falling prices at the pump, along with a falling unemployment rate, accelerating hiring and record-high stock markets have lifted consumers’ confidence to the highest levels since the financial crisis.
In past years of the economic recovery, consumer confidence has been damaged by discord in Washington, D.C., especially by last fall’s government shutdown and standoff over raising the federal debt ceiling.
Nevertheless, consumer confidence is at an almost seven-year high as Republicans get ready to take control of the Senate.
