Survey: Consumer confidence highest in five years

By Bernie Becker - 10/26/12 12:19 PM ET

People in the United States feel more confident about the economy than at any point in the last five years, a key survey said Friday, less than two weeks before Election Day.

The Thomson Reuters/University of Michigan survey ticked up to 82.6 in October, up from 78.3 in September — an increase of more than 20 points over the last year.

The October reading is the survey’s highest since September 2007, and also found that consumers felt better about their own financial situations. People in the U.S. believe both the entire economy and the employment situation will improve over the coming year as well.

Increased confidence from consumers could help President Obama, who is locked in a tight battle for reelection with his GOP challenger, Mitt Romney.

On Friday, the government also reported that the economy grew at a 2 percent clip in this year’s third quarter, a finding that could help the Obama campaign.

Richard Curtin, the chief economist for the Thomson Reuters/Michigan survey, also noted that the optimism expressed by consumers is in “sharp contrast” to the business world and investors, who remain quite concerned about the looming fiscal cliff of tax hikes and spending cuts, set to hit Jan. 2 unless Congress acts to block them.

In fact, Curtin said that the rise in consumer optimism could be because people in the U.S., who polls show are often tired of how Washington operates, believe the cliff will be avoided. The survey also said the optimism suggests stronger spending in the upcoming holiday season.

“The surge in consumer optimism may be largely due to the implied election promises of both candidates that most of the Bush tax cuts and the payroll tax cuts will be promptly extended,” Curtin said in a statement.

The 82.6 figure is also a slight decline from the survey’s initial October reading, which came in at 83.1.

Analysts, on average, had projected that Friday’s finding would be around 83. The survey’s greatest improvements were in the index of consumer expectations, which bottomed out last year in the wake of Congress's debt-ceiling showdown.