WASHINGTON — Americans’ confidence in the economy has inched close to a 5½-year high on growing optimism that hiring and wages could pick up in coming months.
The Conference Board, a New York-based private research group, said Tuesday that its consumer confidence index rose to 81.5 in August. That’s up from a revised reading of 81 in July. And it’s just below the 82.1 reading in June, which was the highest since January 2008.
Consumers’ income expectations have rebounded after falling earlier this year because of a January tax hike, said Lynn Franco, director of the Conference Board’s economic indicators.
Although consumers were more confident about the future, their assessment of the current economy dipped slightly in August.
“Consumer sentiment is holding steady, supported by advances in stocks, solid job creation, and a broad-based recovery in the housing market,” Jim Baird, chief investment officer at Plante Moran Financial Advisors, wrote in a research note.
Consumers’ confidence in the economy is watched closely because their spending accounts for about 70 percent of U.S. economic activity.
After hitting bottom at 25.3 at the depths of the Great Recession in February 2009, the index has bounced back. But it has yet to get back to the 90 reading that signals a healthy economy.
Americans’ confidence jumped in June on hopes that the job market was starting to turn around. The economy has created an average of 192,000 jobs a month this year, slightly ahead of last year’s pace. And the unemployment rate fell last month to a 4½-year low of 7.4 percent.
Still, unemployment remains painfully high four years after the recession officially ended. And employers added just 162,000 jobs in July, the fewest in four months. That raised worries that the sluggish economy could slow any progress made earlier in the job market.
The U.S. economic recovery has been held back this year by tax hikes, federal spending cuts and weaker global growth. The economy expanded at just a 1.7 percent annual rate in the April-June quarter. Most economists expect that figure will be revised up to a 2.2 percent annual rate, mostly because of a jump in June exports.
The government issues its second estimate for second-quarter growth on Thursday. Most analysts predict growth may pick up to about a 2.5 percent annual rate in the second half of the year.