Consumer confidence unexpectedly surged in January as Americans grew increasingly confident that both the economy and labor market will continue to improve in the months ahead.

The Conference Board's January index of consumer attitudes soared 7.3 points to 60.6 -- the first time the index has been above 60 since May 2010. A Bloomberg survey had expected it to rise to 54.3 in January after a revised 1-point decline in December.

Lynn Franco, director of the Conference Board's Consumer Research Center, said consumers sensed a change for the better as the new year started.

"Consumers have begun the year in better spirits. As a result, the Index is now near levels not seen since last spring [May 2010, at 62.7]. Consumers rated business and labor market conditions more favorably and expressed greater confidence that the economy will continue to expand and generate more jobs in the months ahead," Franco said in a statement. "Income expectations are also more positive. Although pessimists still outnumber optimists, the gap has narrowed."

A Better Six-Month Outlook

The index's components also progressed in January. Regarding current conditions, those claiming conditions are "good" increased to 9.8% from 7.7% in December, while those claiming business conditions are "bad" was unchanged at 40.4%.

Concerning the economy's six-month outlook, those expecting an improvement in business conditions increased to 19% in January from 16.8% in December, while those expecting business conditions to worsen decreased to 11.3% from 11.8%.

On future job prospects, the results were slightly better than the December survey. Those anticipating fewer jobs in the months ahead declined to 17.5% in January from 19.2% in December, while those anticipating more jobs rose to 16% from 14.2%.

Economists monitor the consumer confidence index because, historically, rises in consumer confidence are directly correlated with increases in consumer spending. Moreover, consumer spending has accounted for a large portion of U.S. GDP. Hence, if confidence rises, and a trend forms, that most likely means good things are ahead for corporate revenue and earnings. Of course, falling confidence signals the opposite.

January's Conference Board index shows consumer confidence is trending in the right direction, and it's improving in sync with U.S. economic conditions. Americans sense that layoffs are subsiding, the economy is growing, and many companies -- from earnings and cash balance standpoints -- are in good shape.

Provided the U.S. labor market continues to heal in the quarters ahead, consumer confidence should continue to rise -- something that should trigger additional consumer spending and support U.S. GDP growth in 2011.

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16 Comments

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brigittepj

OK, if we can't fix the economy, let's just put out some propaganda saying that consumer confidence is rising and maybe the masses will believe it. -- This is so much BS. In my county, both unemployment and home foreclosures are higher than last year at this time and more and more business are shutting down. The only people who are doing well financially are the ones who caused the crisis to begin with, the wealthy. They are also the only ones who were bailed out by the government. Who do these yahoohs think they're fooling?

January 28 2011 at 11:21 AM Report abuse +1 rate up rate down Reply
HI SEXYRAY

1. Home sales are falling
2. Home prices are plummeting
3. Commercial real estate is about to mimic home foreclosures
4. Retail sales are weak
5. Very few jobs to be had
6. Interest rates are creeping up
7. Most of the states and the US Government are out of money
8. And on and on, oh sure Mr. Lazzaro you may be on another planet!

January 27 2011 at 7:54 PM Report abuse -1 rate up rate down Reply
polarischad800x

What a bunch of BS, my confidence in consumption is at an all time low. I have zero desire to spend money at this time when I see what's goin on with our economy.

January 27 2011 at 11:23 AM Report abuse rate up rate down Reply
vector26436

The confidence is up because the American People see the Republicans, they elected, are trying to stop Obama's mad dash to destroying America's economy. Even his speech Tuesday night was a Invest(spend), Invest(spend), Invest(spend) in more Government programs that got us into this mess to begin with. The GOP in the House will try to cut back on Obama's spending and many of his Pipedreams...

January 27 2011 at 10:05 AM Report abuse rate up rate down Reply
viithseraphim

Wall St. tells us how the rich are doing ... it easy for them; the US Gov. settles the gambling debts of the rich by stealing from the Tax Base ... this way the working stiffs get to pay twice to the financial criminals who are running the country ...

January 26 2011 at 3:57 PM Report abuse +2 rate up rate down Reply
vobox3343

I guess quite a few Americans are beginning to see that the rhetoric from the right doesn't jive with fact. As a matter of fact, many independent fact-check organizations have shown that the majority of half truths and outright untruths on just about any subject are overwhemingly from the right. This is much cause for concern.

January 26 2011 at 12:16 PM Report abuse rate up rate down Reply
1 reply to vobox3343's comment
klovepr

I don't see how you could reasonably come to that conclusion. The republicans were sworn in in January and consumer confidence immediately improves. Please tell us which "independent" fact-check organizations have shown the republicans to be bigger liars than the dems. It wasn't the one owned by George Soros, was it? LOL

January 27 2011 at 1:51 PM Report abuse -1 rate up rate down Reply
kcoryms

This must be from the still employed 250k+ annual salary consumer.

January 25 2011 at 10:42 PM Report abuse +1 rate up rate down Reply
tylrz2

these people who write these articles need to get out into the real world. and ask real people what is going on. it isnt getting better. but we all hope it will

January 25 2011 at 1:59 PM Report abuse rate up rate down Reply
amani4000

Nothing in our economy will "heal" till the bad cut in it is medicated with the TRUTH! Stop the lies!! Arrest the damn Bankers and Brokers that caused this mess, and stop spending money we don't have!!

January 25 2011 at 1:55 PM Report abuse +1 rate up rate down Reply
Sonny

This article makes it very, very clear...........it is the American people against the mainstream media.

January 25 2011 at 1:48 PM Report abuse rate up rate down Reply