US consumer confidence soars to five year high despite market turbulence

AMERICAN consumer confidence is still on the rise, reaching its highest level since January 2008 despite the recent jitters in international markets.

The confidence index, released by the Conference Board yesterday, also rose for a full quarter for the first time in over three years. More respondents now expect an increase in jobs and an improvement in business conditions over the next six months than the reverse.

House price growth in 20 of the largest metropolitan areas in the US, recorded by Standard and Poor’s and Case-Shiller, also displayed strong growth. In the year to April, prices rose by 12.1 per cent, the largest increase since 2006.

April itself saw a record month on month upswing of 2.6 per cent from March, pushing American house prices back to their 2004 levels. The US property market saw a protracted decline during the financial crisis, but a recovery now appears to be in the offing.

Since Fed chairman Ben Bernanke’s most recent press conference last Wednesday, stock markets have suffered. Bernanke indicated that the long process of slowing quantitative easing down may begin later this year, if further growth and labour market improvements occur.

Amna Asaf, an economist for Capital Economics, sounded a cautious note on the seemingly positive confidence figures. “The cut-off date for the survey was 13 June, when the S&P 500 index was still at 1,640, so it missed most of the subsequent slide in the index to below 1,600. Moreover, gasoline prices started to edge down during the survey period”.