Americans are feeling better about the economy again, but will it last this time?
A widely watched barometer of consumer confidence surged in February to its highest level in a year as Americans took note of improving job prospects among friends and family and falling unemployment, which is now at a three-year low.
The brighter assessment released Tuesday by a private research group reflected a more upbeat attitude for the nation generally as the economy picks up. That is a boon for President Obama as he seeks re-election. Polls, including a recent Associated Press-GfK survey, show the Democratic incumbent is beginning to benefit politically from improved views of the economy.
“The economy is getting momentum. Clearly, shoppers are more optimistic about their job prospects,” said Amna Asaf, economist at Capital Economics.
The rising confidence among consumers gave confidence to Wall Street, too, helping it to reclaim the last of the ground it held before plunging into the depths of the Great Recession. The Dow Jones industrial average closed above 13,000 on Tuesday for the first time since May 19, 2008, four months before the fall of Lehman Brothers investment bank and the worst of the financial crisis.
Jack Ablin, chief investment officer at Harris Private Bank, called it “a momentous day for investor confidence.”
Tuesday’s gain puts the Dow 1,160 points below its all-time high, set Oct. 9, 2007. The Great Recession began two months later.
The milestone could draw some fence-sitting investors back into the market and add to the gains, said Brian Gendreau, market strategist at Cetera Financial Group.
But consumer confidence is still below the level of a healthy economy, and trouble could lie ahead. Rising gas prices could sully shoppers’ mood and derail the economic recovery. There are also fears about a nuclear showdown with Iran and the festering European debt crisis.