The Conference Board's Consumer Confidence Index jumped to 118.5 in January, its highest reading in 18 months, as Americans grew more optimistic about current business conditions and the job market outlook.
The better-than-expected reading suggests that consumers are shrugging off concerns about elevated prices and interest rates, potentially supporting continued spending growth in the months ahead.
Present Situation Improves
The Present Situation Index, which measures consumers' assessment of current business and labor market conditions, rose sharply to 152.3. Respondents reported that jobs were plentiful and business conditions had improved.
"The improvement in consumer confidence is particularly notable given that it's occurring while the Fed maintains restrictive policy," said consumer researcher Thomas Anderson. "This speaks to the underlying strength of household finances."
Future Expectations
The Expectations Index, which measures consumers' short-term outlook for income, business, and labor market conditions, also improved. Fewer consumers expect business conditions to worsen, and income expectations rose.
Buying plans for big-ticket items such as automobiles and major appliances showed modest gains, suggesting that consumer spending may remain supportive of economic growth.