Greater optimism about the economic outlook and personal finances in the midst of record stock market prices pushed U.S. consumer sentiment to its highest level in nearly six years in May, a survey released Friday showed.
While upper income households continued to set the pace, confidence also began to improve among middle and lower income households in the latter part of the month. Wealthier households are more likely to be invested in equities and reap the benefits of this year's sharp stock market rally.
The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment rose to 84.5 from 76.4 in April. It was the highest level since July 2007. The report topped expectations for 83.7, which was May's preliminary figure earlier in the month.
The barometer of current economic conditions jumped to its highest level since August 2007 at 98.0 from 89.9, while the gauge of consumer expectations climbed to 75.8 from 67.8.
"The data clearly suggest a faster pace of growth in consumer spending during the year ahead than was anticipated even one month ago," survey director Richard Curtin said in a statement.
The index of buying conditions for durable goods rose to 147 from 137.
Rising stock market and home prices prompted more consumers to report that their finances had recently improved rather than worsened for the first time in five years, the survey said. As well, 58 percent said the economy had improved.
The survey's one-year inflation expectation was unchanged at 3.1 percent, while the survey's five-to-10-year inflation outlook also held steady at 2.9 percent.