Americans' confidence in the economy surges
Consumer confidence surged in November to its highest level since July, a sign that Americans may be more willing to spend, the Conference Board reported Tuesday.
"Consumers appear to be entering the holiday season in better spirits," Lynn Franco, director of the Conference Board Consumer Research Center, said in a statement.
But confidence is still painfully below what is typically seen during a healthy economy. And Americans could start to feel more skittish if the debt crisis in Europe deepens and stokes fears of another recession in the U.S.
"I think this will be a good holiday shopping season," said Mark Vitner, senior U.S. economist at Wells Fargo. "But the question is what will happen after that?"
The Conference Board, a private research firm, said its Consumer Confidence Index climbed 15 points in November to 56.0. That is the highest it has been since the 59.2 reading over the summer. That is still well below the level of 90 that indicates an economy on solid footing.
The confidence numbers follow other encouraging signs: Every month for the past year except one, spending by Americans has grown 2 percent or more from a year earlier, according to government data.
Americans spent $52.4 billion over the four-day Thanksgiving Day weekend, the highest total ever recorded during the traditional start to the holiday shopping season, according to the National Retail Federation. The average shopper spent a record $398.62, up from $365.34 a year ago, the NRF said.
And sales on Cyber Monday, the first online shopping day after the Thanksgiving weekend, rose 22 percent from a year ago to $1.25 billion, the biggest online sales day in history, the research firm comScore Inc. reported.
Retailers count on the holiday shopping season for as much as 40 percent of their annual sales.
According to the consumer index, Americans' anxiety regarding short-term business conditions, jobs and income prospects eased considerably after six months of declines.
Americans expecting more jobs in the months ahead rose to 12.9 percent from 10.8 percent, for instance, while those expecting fewer jobs declined to 24.1 percent from 27.6 percent the previous month. And the proportion of consumers anticipating an increase in their income climbed to 14.9 percent from 11.1 percent.
Consumers have some reason to be more optimistic. Earlier this month, the Labor Department reported that unemployment nudged down to 9 percent in October from 9.1 percent in September. And the nation added 80,000 jobs in October for the 13th straight month of gains.
Still, other economic prospects are not as good. Home prices are falling again in most major U.S. cities after posting small gains over the summer and spring, according to a report issued Tuesday.
And prices for food, travel and other things have risen steadily this year, according to government data. They went up 3.5 percent in October from the same month a year ago.
Adding to that, the European debt crisis threatens to undermine the U.S. economy.
"People are pulling out all the stops to spend this holiday," said Vitner, the Wells Fargo economist. "But it's going to be hard to sustain that."