U.S. consumer confidence hits 7-year high in October

U.S. consumers are quite optimistic about the economy this month, according to a report released Tuesday.

The Conference Board, a private research group, said its index of consumer confidence increased to 94.5 in October from a revised 89.0 in September, first reported as 86.0.

The October confidence reading is the highest since late 2007 before the Great Recession started. Economists surveyed by The Wall Street Journal had forecast the latest index to rise, but only to 87.9.

The present situation index, a gauge of consumers’ assessment of current economic conditions, edged up to 93.7 from a revised 93.0 in September, originally put at 89.4.

Consumer expectations for economic activity over the next six months jumped to 95.0 from a revised 86.4 first reported as 83.7

“A more favorable assessment of the current job market and business conditions contributed to the improvement in consumers’ view of the present situation,” said Lynn Franco, director of economic indicators at the board. “Looking ahead, consumers have regained confidence in the short-term outlook for the economy and labor market, and are more optimistic about their future earnings potential.”

Households are enjoying the benefits of falling gasoline prices and healthier job markets. Their brighter spirits are a plus for consumer outlook.