The US consumer, whose spending spree was the engine of global growth in the past decade, expressed more confidence in the future than any forecaster predicted, raising hopes that freefalling house prices and shaky business spending may not after all be a drag on the world's largest economy this year.
The Conference Board consumer confidence survey for February, out yesterday, suggested Americans have shaken off the blues thanks to the improving labour market and better income prospects.
The improvement in sentiment eclipsed gloomier data from the housing market, which showed house prices still going down in most areas of the country, and a disappointing read-out of durable goods orders in January.
Estimates for the latest consumer confidence index ranged from 58 to almost 68, but the figure was 70.8, up from a revised 61.5 in January and the highest number since before the Japan tsunami and Greek crisis derailed recovery expectations a year ago.
Amna Asaf, economist at Capital Economics, said the improving sentiment was likely to be reflected in consumption growth and in first quarter GDP, but cautioned that there was still a long way to go to heal.
