Posted on Thursday, January 27, 2011
As president Obama prepares to address the nation in tonight's State of the Union, he'll be speaking to an increasingly cheery group of American consumers.
Consumer confidence hit an eight-month high in January, with spending growing at the best rate since 2006.
The Conference's Board's widely-watched consumer confidence index was at a rose to 60.6 from 53.3 in December, beating expectations. The figure is still short of the 90 rating that suggests a healthy economy. The Conference Board's index is based on a survey of 5,000 US households.
Consumer spending increased by 4 percent last year, the best growth since the end of 2006, according to government figures. Spending by American consumers accounts for about 70 percent of the economy.
Retail sales rose 5.5 percent during the holiday period last year -- the best year-over-year increase in five years -- sparking hopes of slow recovery. But figures released today quoted by analysts High Frequency Economics suggest the splurging didn't last in January, with the pace of sales returning to pre-Thanksgiving levels.
And despite signs of renewed consumer confidence, almost half of Americans expect the recession to last another year, according to a new survey by Nielsen.
More Americans -- 45 percent -- think the recession will last, compared with 40 percent of Europeans and just 20 percent of consumers in Asia, according to Nielsen's global consumer confidence survey.
High unemployment caused much of the pessimism, Nielsen found. The survey polled 29,000 internet shoppers in 52 countries in November.
Around the world, high unemployment, along with rising commodity prices have made many reluctant to spend. The most optimistic shoppers were in Latin America, spurred by growth in Brazil and rising consumer confidence in Mexico, according to Neilsen. The most pessimistic shoppers were in Europe.
"Global consumers ended 2010 more pessimistic than at the start of last year," Neilsen economist Venkatesh Bala said in a statement. "Global consumers - especially in the West, are bracing themselves for another year of flat to sluggish growth in 2011."
Confidence was lowest in the European countries worst hit by the slowdown: Portugal, Ireland, Italy, Greece and Spain. Global economic recovery is set to dominate the agenda as some of the world's top leaders, thinkers and business titans gather once again in Davos, Switzerland for the World Economic Forum's annual meeting.
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