The numbers: Consumer confidence jumped in January to a two-year high of 114.8, a survey showed, reflecting slower inflation, a record stock market and improved growth in the economy.
The closely followed index advanced from a revised 108.0 in December, the Conference Board said Tuesday.
Economists polled by the Wall Street Journal had forecast the index to register 115.0.
The last time the index was higher was in December 2021.
Consumer confidence tends to signal whether the economy is getting better or worse. A similar survey known as consumer sentiment also rose this month to the highest level since the summer of 2021.
Both indexes are still well below their pre-pandemic peak, however.
Key details: A measure that looks at how consumers feel about the economy right now jumped to 161.3 from 147.2 in the prior month.
That’s the strongest reading since the last month before the onset of the pandemic in March 2020.
A confidence gauge that looks ahead six months rose to 83.8 from 81.9 in the prior month.
Big picture: The outlook for the economy might be getting brighter.
Inflation is slowing and returning close to pre-pandemic levels, for one thing.
The unemployment rate is still very low, giving Americans the confidence to keep spending.
And the next move by the Federal Reserve on interest rates is widely expected to be a reduction, making it easier for people to buy homes or companies to borrow. The first rate cut is likely in the spring or early summer.
Looking ahead: “January’s increase in consumer confidence likely reflected slower inflation, anticipation of lower interest rates ahead, and generally favorable employment conditions as companies continue to hoard labor,” said Dana Peterson, chief economist at the board.
Market reaction: The Dow Jones Industrial Average
DJIA,
and the S&P 500
SPX,
fell slightly in Tuesday trades.