NEW YORK -- Consumer confidence surged in November, rising for the first time in five months, as Americans cheered the continuing strength of the U.S. economy and big gains on Wall Street.
The Conference Board said today that its index of consumer confidence, which is a measure of consumers' willingness to spend, rose to 135.8 in November from a revised 130.5 in October.
The increase was greater than analysts had expected and left the index only about 4 points below its peak of 139 in June, which was the highest reading in more than 30 years.
Consumer sentiment is an important economic indicator, since consumer spending accounts for two-thirds of the nation's overall economic activity. The sharp rise in November bodes well for the nation's retailers at the start of the crucial holiday shopping season.
"A booming economy and a strong job market have consumers in a confident, free-spending mode," said Lynn Franco, the Board's director of consumer research.
"With increasing numbers of consumers expecting their incomes to rise, it's not surprising that $4,000 leather bags and $3,000 cashmere coats are selling briskly, along with $15 Pokemon toys and $25 computer mouses."
There have been worries in recent months that consumer confidence was on the decline amid fears that the economy was slowing.
The Federal Reserve has raised interest rates three times this year to try to keep the economy from overheating and head off a resurgence of inflation. The rising interest rates shook Wall Street, sending stocks on a wild ride.
But over the last month or so, the stock market rebounded. The Nasdaq composite index, which is made up largely of technology stocks, hit 16 record highs in recent weeks. The Dow Jones industrial average is up sharply from its low of 10,019.71 on Oct. 15.
In morning trading today, the Dow was up 66.06 at 11,013.98, well above its mid-October low but below the record high of 11,326.04 set Aug. 25.
Also fueling consumers' confidence is a strong labor market, with unemployment levels at 29-year lows. And Americans' personal income -- which includes wages, interest and government benefits -- vaulted ahead in October at the fastest pace in more than five years.
"Consumers got over being pessimistic earlier in the fall and are feeling better now, particularly about the future," said Gary Thayer, chief economist at A.G. Edwards & Sons Inc. in St. Louis.
In the Conference Board's survey, the index that measures feelings about present conditions rose 1.5 points to 175.3, while the index that measures expectations for the next six months rose 8.1 points to 109.6.
More consumers think that current business conditions are good and fewer think that jobs are hard to find. The survey also found more consumers expect business conditions to get better in the next six months, and that there will be more jobs and bigger paychecks.
While consumers are optimistic about what's ahead, many indicated that they may slow their spending in the next six months. Fewer Americans plan to buy a car, a home or a major appliance in the next six months, the survey said.
The consumer confidence survey is based on a poll of 5,000 households conducted by NFO Research Inc. of Greenwich, Conn. The index has a base of 100, set in 1985.