Three year high for US morale

 
Julian Harris
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AMERICAN consumers are the most upbeat they have been since February 2008 as the US economy continues to rebound, official data showed yesterday.

“Rising equity prices, falling unemployment and the boost to disposable incomes from the payroll tax cut are more than offsetting the effects of higher gasoline prices and lower house prices,” commented Paul Dales of Capital Economics.

High street morale was boosted despite upward revisions being made to recent months due to changes in the Conference Board’s methodology.

The headline figure for consumer confidence reached 70.4 this month, from 64.8 in January.

And consumers are optimistic for the near future, with the survey’s expectations index surging to 95.1, from 87.3 last month, smashing the long term average of 92 for the first time since the recession.

America’s recovery was also reflected in the Federal Reserve Bank of Richmond’s manufacturing figures, which bounced back strongly.

The index climbed back to 25 this month, as new orders soared by 10 points (from 17 to 27), the Richmond Fed announced yesterday.

However, the US housing market continues to slump, with prices falling 0.4 per cent in December, compared to the previous month.

In the final three months of 2010, prices in 20 main US cities dropped 3.9 per cent on the previous quarter, the Case-Shiller home price index revealed yesterday.

“The silver lining that they should be bottoming out soon,” said ING’s Teunis Brosens.