Optimism over the U.S. government's stimulus programs to combat the recession lifted consumer confidence in May to its highest level in eight months, a survey released on Friday showed.
The gradual healing in consumer confidence, which hit a 28-year low in November, has been seen as a sign of an economic rebound from the worst downturn since the Great Depression.
The Reuters/University of Michigan Surveys of Consumers said its final May reading on consumer sentiments was 68.7, higher than an early May figure of 67.9 and a final April reading of 65.1. This was slightly above economists' median expectation of a reading of 68.0, according to a Reuters poll.
Compared with the state of the economy six months ago, consumers have indeed regained a good measure of confidence, Richard Curtin, director of the surveys, said in a statement.
Analysts monitor consumer sentiment as a leading gauge of consumer spending, which accounts for about 70 percent of the U.S. economy. Earlier Friday, the government revised down its first-quarter reading on consumer spending to 1.5 percent from its previous estimate of 2.2 percent.
The survey's expectations component rose to 69.4 in late May from 63.1 a month earlier. This compares with a median forecast of 68.3.
Consumers' outlook over the next 12 months and five years also jumped since April, spurred by confidence in President Barack Obama's economic stimulus measures such as rebate checks and extension of unemployment benefits.
Overall, the data provide clear evidence that President Obama's policies have acted to improve economic expectations in advance of actual gains in the economy, Curtin said.
However, consumers remain nervous about their finances amid harsh jobs conditions, according to the latest survey.
Despite rising optimism about prospects for the overall economy, consumers still view their finances as out of balance with the economic realities they now face, Curtin said.
Consumers downgraded their view of current finances in late May from a month earlier.
The Reuters/University of Michigan index on current economic conditions stood at 67.7 in May, down from 68.3 in April. But it was still the highest reading since December and above the median forecast of 67.3.
This lingering anxiety could mitigate a sizable bounce in consumer spending in the second half, limiting the economic recovery, according to Curtin.
(Reporting by Richard Leong, Editing by Chizu Nomiyama)