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Consumer confidence jumps to five-month high thanks to falling gas prices – News Opener

The numbers: Americans feel a lot better because of falling gas prices: A survey of U.S. consumer confidence jumped to a five-month high of 108 in September.

The strong labor market and rising wages also gave Americans more confidence, the nonprofit Conference Board said Tuesday. The unemployment rate is close to a 54-year low and wages are rising at the fastest pace in decades.

Economists polled by The Wall Street Journal had forecast the index to rise to 104.5 from a revised 103.6 in the prior month.

Big picture: Falling gas prices have eased the anxieties of Americans feeling the pain of high inflation. But now rising interest rates are increasing their borrowing costs for houses, new cars and other big-ticket items.

The Federal Reserve is raising rates sharply to to try to tame the highest inflation in 40 years. Higher rates raise slow the economy and an increasing number of economists think another recession is likely by next year.

The Fed is worried the tightest labor in decades is worsening already high inflation. The central bank aims to slow the economy enough to reduce the demand for labor and even cause the unemployment rate to rise.

Key details: A measure of how consumers feel about the economy right now rose to 149.6 in September from 145.3 in the prior month.

A similar confidence gauge that looks ahead six months climbed to 80.3 from 75.8. That’s the highest level in seven months.

Looking ahead: “The improvement in confidence may bode well for consumer spending in the final months of 2022, but inflation and interest-rate hikes remain strong headwinds to growth in the short term,” said Lynn Franco, senior director of economic indicators at the board.

Market reaction: The Dow Jones Industrial Average
DJIA,
+0.85%

and S&P 500
SPX,
+1.04%

rose in Tuesday trades, going against the tide of a series of sharp declines.

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