Consumer confidence hits seven-year high in October

Consumer confidence hit a seven-year high in October on expectations that the economy will continue to grow and wages will increase.

Sentiment increased to 86.9 from 84.6 in September, its third straight monthly gain, the highest level since July 2007, according to the University of Michigan’s index released Friday.

{mosads}Richard Curtin, the survey’s chief economist, said about 60 percent of consumers responded that the economy had recently improved, the most positive rating in more than 10 years.

“Gains in holiday spending are expected to be the best in several years, benefitting from higher confidence as well as falling gas prices at the pump,” Curtin said.

About 45 percent said they are expecting good times financially in the year ahead, up from 28 percent a year ago, and the highest level since July 2007.

In the September and October surveys, more households expected income gains than anytime since September 2008.

In addition, the median increase of 1.1 percent expected by all households was the highest since late 2008.

“While still meager, this improvement, along with a decline in the expected inflation rate, meant that more households expected their incomes to keep pace with or to exceed the inflation rate,” the survey said.

Consumers anticipated that the continued strength in the economy would lead to a lower unemployment rate.

Curtin said that respondents emphasized improved wage and employment prospects because of a stronger economy.

The survey did not find was any negative effects on confidence from the global economic slowdown, military conflicts or Ebola.