Updated from 11:04 a.m. EDT
Higher interest rates and a rout in technology stocks have yet to take a bite out of the immense confidence that has helped U.S. consumers drive the economy to new heights, a report showed Tuesday.
, a private trade group, said its
consumer confidence index jumped almost seven points in May, to a four-month high of 144.4 after declining for three months. The May consumer confidence number is near its high of 144.7 reached in January. Economists had been expecting a decline in May to 136, according to a
April's consumer confidence figure was also revised upward to 137.7 from a previously reported 136.9.
Consumers also painted a rosier picture of their current condition, as an index measuring their present situation rose to 183.1 from 179.8 in April. Their forecast for the future also appear brighter, as the expectations index rose to 118.7 from 109.7 in April.
The data appeared to indicate that most American consumers, enjoying a 30-year low in unemployment and rising wages, have not been significantly affected by the sting of higher interest rates or the recent pullback in most
In April, the unemployment rate dropped to 3.9%, its lowest level since 1970, according to the
. Additionally, gains in workers' wages have started to accelerate. A recent
report showed that personal incomes rose 0.7% in April.
"The main reason that consumer confidence remains so high is the booming job market," said Joe Lavorgna, senior U.S economist at
in New York.
Meanwhile, higher interest rates have helped to curb demand slightly in some key areas of the economy, such as the housing market. But in large part, the sting of higher rates has not offset the confidence that has grown due to the vibrant job market.
has raised short-term interest rates six times in the past year, in part to ease consumer demand. At its most recent meeting on May 16, the Fed boosted the magnitude of its previous quarter-point hikes to half a percentage point, after demand showed no significant signs of slowing. Higher short-term rates, which act as a basis for everything from credit cards to mortgages, are intended to slow economic activity by making it more costly for consumers and businesses to borrow and spend.
In recent weeks, the Nasdaq composite index, a bellwether for strong economic growth in recent years, has fallen sharply. The Nasdaq recently traded near 3200, down from its mid-March high of 5000.
"Volatile financial markets and interest-rate hikes are not expected to have a significant impact on consumers' spirits," said Lynn Franco, director of the Conference Board's consumer research center.
Consumers have been a major driver of the record U.S. economic expansion, accounting for roughly two-thirds of the nation's
gross domestic product.
As the economy has surged in recent years, unemployment has dropped as confidence has risen. Many economists have also attributed strong confidence to the wealth created by rising stock markets. But recent readings on confidence levels may indicate that stocks may be less of a factor in the morale of consumers.
The data echoed other recent indicators that have shown consumer confidence on the rise. Last Friday, the
University of Michigan's
consumer sentiment survey rose to 110.7 from 109.2 in April.
The Conference Board's monthly consumer confidence index is based on a sample of 5,000 U.S. households, and is measured relative a 1985 level of 100.