US consumer confidence rebounded in April, reaching its highest level since 2007 and supporting expectations for a stronger second quarter.
The Reuters/University of Michigan consumer sentiment index climbed to 95.9 in April, up from 93.0 in March. The April reading was the highest since 2007, as consumer optimism recorded its highest five-month average since May 2004.
The April increase was much higher than forecasts, which called for 94.
Compared to April 2014, the consumer sentiment index was up 14 percent.
Both of the index’s main components increased in April. The gauge of current economic conditions advanced 3.2 points to 108.2 and was up 9.6 percent from a year earlier. The index of consumer expectations rose 2.7 points to 88.0 and was up 17.8 percent from April 2014.
“While there were some important exceptions, the cumulative improvement in a broad range of economic assessments are now comparable to the peak levels recorded in the mid 2000’s,” said Survey of Consumers chief economist Richard Curtin.
However, Curtin cautioned that income expectations remained quite weak and that consumers were increasingly dependent on low interest rates.
Average hourly earnings are increasing around 2 percent annually. Average hourly earnings rose 0.3 percent in March, the Labor Department reported earlier this month.
“Overall, the data continue to support a 3.3% growth rate in personal consumption expenditures during 2015, even with a weather diminished 1st quarter performance,” Curtin added.