Consumer confidence is booming.
The preliminary reading on December consumer confidence from the University of Michigan came in at 93.8.
This is the highest reading for the index since January 2007.
Expectations were for the reading to come in at 89.5, up from the 88.8 reading in November that marked a seven-year high for the index.
The surge in consumer confidence comes as the price of gas has fallen sharply over the last several months, which many economists argue serves as a tax cut for consumers, putting more money in pockets ahead of the holiday shopping season.
In a note to clients on Thursday after the November retail sales report came in better than expected, economists at Capital Economics said:
The strong rise in retail sales in November shows that we were right to dismiss all the reports that holiday sales have been weak. The truth is that the rapid rises in employment mean that this holiday shopping season will be the best in nine years.
The strength of Friday’s consumer confidence numbers certainly support the contention that we are on track for a strong holiday shopping season.
The current conditions component of the reading came in at 105.7, up from 102.7 in November and better than the 101.4 expected.
The 12-month economic outlook came in at 117, up from 104 in November, also marking the highest for the expectations measure since January 2007.
Inflation expectations also ticked higher, with the 1-year inflation expectation rising to 2.9% from 2.8% last month while the five year outlook rose to 2.9% from 2.6% last month.
More to come …