US consumer confidence jumps to two-year high

Consumer confidence in the US increased for the third straight month in January, rising to its highest level in more than two years, according to data released on Tuesday by the Conference Board.

The closely watched Conference Board Consumer Confidence Index rose to 114.8 this month, up from a revised 108.0 in December.

That was the highest reading since December 2021 and more or less in line with the consensus forecast of 115.

The Present Situation Index, based on consumers’ assessment of current business and labour market conditions, jumped to 161.3 from 147.2.

Meanwhile, the Expectations Index, which gauges the short-term outlook for income, business, and labour market conditions, also improved to 83.8 from 81.9.

According to economist Oliver Allen from Pantheon Macroeconomics, the Present Situations Index typically tracks the unemployment rate but is also influenced heavily by movements in gasoline prices and the stock market.

"The continued rally in the S&P 500 and fall in gas prices since late last year probably explain much of the recent rise. But the trend in sentiment is presumably also being boosted by the sustained sharp fall inflation and the recent drop in mortgage rates; both likely will continue," Allen said.