Consumer confidence improved more than expected during the first part of September, a new survey showed, as President Donald Trump's administration worked to reset negotiations with China over the ongoing trade dispute, calming markets following a turbulent August.
The University of Michigan said its preliminary reading of consumer sentiment for September jumped to a reading of 92, after dropping in August to 89.8, the lowest in almost three years. Economists surveyed by the data provider FactSet had expected an increase to just 90.4.
Economists closely monitor households' confidence in career prospects and finances, since consumer spending accounts for about 70% of U.S. gross domestic product.
Recent surveys have shown that Trump's escalation of the trade war in August took a toll on the confidence of consumers, business executives and investors alike, prompting speculation that further interest-rate cuts might be needed from the Federal Reserve to stimulate economic activity.
But the S&P 500 index of large U.S. stocks has risen 2.9% so far this month, on reports that the Trump administration and Chinese leaders are engaging in a new round of talks to resolve the dispute, and amid predictions that the Fed will cut interest rates at a meeting next week, for the second time this year.