Consumer Sentiment Reaches Highest Level Since Early 2004

Consumers' confidence in the US economy has surged this month to its highest level in 13 years, researchers said Friday.

On Friday, the UMich survey showed the consumer sentiment index hit 101.1, the highest level for the reading since the start of 2004.

This "as good as it gets" outlook is supported by a moderation in the expected pace of growth in both personal finances and the overall economy, accompanied by a growing sense that, even with this moderation, it would still mean the continuation of good economic times.

This represents a 15.9% increase year over year.

The measure on current economic conditions soared to 116.4 from September a year ago, while the index of consumer expectations blazed to 91.3 from 84.4.

The UMich survey, which is a preliminary reading on confidence in October, thus adds credence to the idea that after September economic data were negatively impacted by the hurricane - take, for instance, last week's disappointing jobs report - the economy remains in a strong position to rebound.

The big picture: Consumers are content.

A measure of US consumer sentiment rose swiftly in the first half of October to its highest level since 2004, a robust sign for household spending this fall.

"Confidence continues to be supported by the soaring stock market and conditions in the labor market which, looking through the disruption caused by the hurricanes in September, still look very strong", said Andrew Hunter, U.S. economist at Capital Economics, in a note to clients.

"The October gain was broadly shared, occurring among all age and income subgroups and across all partisan viewpoints", said Richard Curtin, the survey's chief economist. Indeed, nothing in the latest survey indicates that consumers anticipate an economic downturn anytime soon - which contrarians may consider a clear warning sign of trouble ahead.

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