January Consumer Sentiment Reaches 8-Month High

Consumer sentiment picked up in January, rising to an eight-month high as Americans grew optimistic over job prospects as the national unemployment rate ticked down another point in December.

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The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 74.0 in January, up from 69.9 at the end of December, reaching the highest level since May 2011 after five consecutive months of gains.

Separate data today showed the U.S. trade deficit rose in November in a sign that domestic demand is picking up while global demand remains depressed. But while data shows the U.S. economy to be marginally improving, the slowdown abroad does weigh on gross domestic product.

“The external outlook does not bode well for U.S. exports, as a deceleration in global growth will coincide with a stronger U.S. dollar due to lingering financial concerns regarding Europe’s sovereign debt turbulences,” said Martin Schwerdtfeger, senior economist at TD Bank Group.

Thirty-percent of consumers polled for the Thomson Reuters/University of Michigan survey said they had heard of recent job gains, up from 21 percent in December to a record high for the survey.

“The data suggest a stronger consumer spending outlook, rising to about a 2.1 percent gain in 2012,” said survey director Richard Curtin.

However, the majority of respondents rated economic policies unfavorably for the sixth month in a row, betraying a lack of confidence in the government.

The survey’s barometer of current economic conditions rose to 82.6, its highest since February, while its gauge of expectations for the next six months rose to 68.4 from 63.6 in December.

But though consumers are more confident in the recovery than they have been in previous months, few Americans — just 24 percent of those surveyed — actually expect their finances to improve in January.

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