A commonly followed measure of consumer confidence in the U.S. economy just increased to the highest level since September 2021.
The first July reading of the University of Michigan Consumer Sentiment Index showed a reading of 72.6 on Friday. That number came in significantly higher than the 65.5 economists had expected and reflected a 13% increase from the month prior. That marks the fastest pace since December 2005, when the economy was recovering from Hurricane Katrina.
“The sharp rise in sentiment was largely attributable to the continued slowdown in inflation along with stability in labor markets,” Surveys of Consumers director Joanne Hsu said in the release.
Consumers have had plenty to be bullish about recently, including a month of largely strong economic data, upbeat reports to kick off second quarter earnings, and waning fears of a second Federal Reserve rate hike in the back half of the year propelling the 2023 stock market rally higher.
A 19% surge in long-term business conditions and a 16% increase in short-run business conditions were the primary drivers behind Friday’s surprise number, according to the University of Michigan. The report did, however, include a slight uptick in consumers’ inflation expectations.
Read Josh Schafer’s full report from Yahoo Finance here.