Last month I noted consumer confidence zoomed past economists’ forecasts in April to its highest level since November. Today brought more good news, as consumer confidence rose to the highest level since September, buoyed by an unexpected surge in the stock market, hopes that the job market might turn around and the belief that the worst of the recession is behind us. The Conference Board’s Consumer Confidence Index’s 14.1-point surge to 54.9, following another big gain in April, is encouraging, especially considering economists surveyed by Thomson Reuters were expecting the Consumer Confidence Index to fall somewhere near 42.3. It’s also worth noting confidence levels had hit a new historic low of 25.3 in February 2009. May’s confidence level is the highest since eight months ago, when it was 61.4, though it’s worth noting a reading above 90 means the economy is on solid footing, while a reading above 100 signals strong growth. News of the higher than expected consumer confidence numbers may have also contributed to a rise in the Dow, which rose 200.24, or 2.4 percent, to 8,477.56.
However, despite this encouraging sign, there are still signs the economy still faces challenges. The unemployment rate is expected to climb to 9.2 percent in May, up from 8.9 percent, as companies lay off more workers, and home prices fell at the sharpest rate ever in the first quarter of 2009, though the drop off was worse at the beginning of the quarter than at the end.
Let’s hope the economy is starting to turn the corner, because it’d be nice to see the economy back on track.