Americans are more confident in the U.S. economy than at any point in the past five years, thanks to surging home prices, a brighter job market and record-setting stock prices. Stock averages on Tuesday extended the year's explosive rally.
Further gains in consumer confidence could help the economy withstand the effects of higher taxes and federal spending cuts that kicked in this year. Spending by consumers drives about 70 percent of economic growth.
Consumer confidence jumped in May to 76.2, the Conference Board, a private research group, said Tuesday. That was up from a reading of 69 in April and is the highest level of confidence since February 2008, two months after the Great Recession officially began.
A separate report Tuesday showed that U.S. home prices jumped 11 percent in March compared with a year ago, the sharpest 12-month increase since April 2006. Prices rose year over year in all 20 cities in the Standard & Poor's/Case Shiller home price index.
The reports helped fuel a powerful rally on Wall Street. Traders were also encouraged by gains in overseas markets, especially in Japan and Europe.
The Dow Jones industrial average was up about 165 points in late-morning trading. Broader stock indexes also jumped. The Dow has rocketed 18 percent this year.
Surging stock prices and steady home-price increases have allowed Americans to regain the $16 trillion in wealth they lost to the Great Recession. Some economists have said the increase in home prices alone could boost consumer spending enough to offset the cost of a Social Security tax increase that's reduced paychecks for most Americans this year.
(copyright associated press 2013)