NEW YORK – Consumer confidence in the U.S. jumped more than forecast this month to the highest level in almost six years, suggesting the June slowdown in spending may be temporary, Bloomberg News Service reported Tuesday.
The New York-based Conference Board’s index of confidence soared to 112.6, from a revised 105.3 the prior month. Earlier Tuesday, the Commerce Department reported that consumer spending rose 0.1 percent in June, slowing from a 0.5 percent gain in May. A measure of inflation closely watched by the Federal Reserve eased.
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Confidence among Americans, whose spending accounts for more than two-thirds of the economy, is being shored up by a jobless rate that’s near the lowest in six years and income gains that have outpaced inflation. Stocks extended their rally after the report, before surrendering some of their gains.
“The consumer economy, once again, remains on a firmer footing than it has generally been given credit for,” said Richard DeKaser, chief economist at National City Corp. in Cleveland, Ohio. “Even in spite of the pause in spending, we will see them come back.”
DeKaser’s forecast of 111 for the confidence index was the most accurate among 67 analysts surveyed by Bloomberg News. The median forecast was for an advance to 105.
In addition to near-record gasoline prices and last week’s stock-market rout, consumers have also had to weather falling home values. Home values in 20 U.S. cities fell the most in at least six years, according to the S&P/Case-Shiller index, which declined 2.8 percent in May from a year ago.
