New York Even with unemployment still rising and home prices still slumping, Americans are getting their confidence back in the economy.
A widely watched barometer of confidence unexpectedly rose to the highest level since September, buoyed by an unexpected surge in the stock market, hopes that the job market might turn around and the belief that the worst of the recession is behind us.
But don’t expect shoppers to buy expensive jeans and fancy furniture anytime soon.
“Consumers are not likely to spend just because they think things will get better,” said Mark Vitner, senior economist at Wachovia. “They will actually have to see them get better.”
As a testament to the economy’s challenges, a closely monitored housing index also released Tuesday showed home prices fell at the sharpest rate ever in the first quarter, though the drop-off was worse at the beginning of the quarter.
Meanwhile, Americans are grappling with an unemployment rate that’s expected to climb to 9.2 percent in May, up from 8.9 percent, as companies lay off more workers.
That has helped push shoppers to keep shopping at discount stores and cutting back on nonessentials.