High oil prices or not, American consumers are feeling more confident about conditions than at any time since the recession began in late 2007.
That’s according to the latest survey by Thomson Reuters/University of Michigan, which reported Friday that its March consumer sentiment index climbed to 76.2 from 75.3 a month ago. That pushed up the average reading for the first quarter to the highest level since the fourth quarter of 2007.
What’s been boosting sentiment? In a word, jobs.
The last three months have seen an acceleration of job growth, and the Reuters/Michigan survey found that more people heard news about employment gains than at any other time in the 60-year history of the survey. And only 19% said they thought the jobless rate would increase in the year ahead.
The increased confidence could translate into higher spending, but survey director Richard Curtin worries that consumers may be getting a little ahead of themselves.
“Pessimism has recently faded at a rapid pace,” he said, noting in a release, “perhaps too rapidly, as expected job and income gains may be unrealistically high for the economy to meet.”
In fact, the latest survey showed that while consumers feel better about the current situation, they remain cautious about the future. Only one in four think their finances will improve during the year.
Government data released Friday indicate consumers spent heartily in February, which will give a little more juice to economic growth. The bad news, though, is that households had to reach into their savings to support the stepped-up consumption because their incomes didn’t keep pace.