Sam Ro

Consumer confidence surged in August.

According to the Conference Board's new report, the consumer confidence index jumped to 92.4 in August, the highest level since October 2007.

This is up from 90.3 in July, and it was much stronger than the 89.0 forecasted by economists.

"Consumer confidence increased for the fourth consecutive month as improving business conditions and robust job growth helped boost consumers’ spirits," said the Conference Board's Lynn Franco. "Looking ahead, consumers were marginally less optimistic about the short-term outlook compared to July, primarily due to concerns about their earnings. Overall, however, they remain quite positive about the short-term outlooks for the economy and labor market."

From the Conference Board:

Consumers’ appraisal of current conditions continued to improve through August. Those saying business conditions are “good” edged up to 23.9 percent from 23.3 percent, while those claiming business conditions are “bad” declined to 21.5 percent from 22.8 percent. Consumers’ assessment of the job market was also more positive. Those stating jobs are “plentiful” increased to 18.2 percent from 15.6 percent, while those claiming jobs are “hard to get” declined marginally to 30.6 percent from 30.9 percent.

Consumers were slightly less optimistic in August about the short-term outlook. The percentage of consumers expecting business conditions to improve over the next six months held steady at 20.4 percent, while those expecting business conditions to worsen fell to 10.2 percent from 12.1 percent. Consumers, however, were somewhat mixed about the outlook for the labor market. Those anticipating more jobs in the months ahead fell to 17.0 percent from 18.7 percent, although those anticipating fewer jobs also declined to 15.8 percent from 16.6 percent. Fewer consumers expect their incomes to grow, 15.5 percent in August versus 17.7 percent in July, while those expecting a drop in their incomes rose marginally to 11.9 percent from 11.1 percent.

"The rise was driven by an increase in the current situation index, to 94.6 from 87.9, while the expectations index declined, to 90.9 from 91.9," said Capital Economics' Paul Dales. "On the face of it, the latter is still consistent with annualised real consumption growth of around 3%. Given the weakness of retail sales in July, 3% looks like a tough target for the third quarter. But with income growth accelerating and equity prices hitting record highs, it looks perfectly possible for the fourth quarter."

"While the expectations index has been volatile in recent years, the present situation index has been steadily trending higher over that time, mirroring improvements in housing and labor markets," said Barclays' Michael Gapen. "We expect this pattern to continue over the medium term and look for consumer confidence to remain on a broadly upward trend as a result."

Here's a historical look:

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