U.S. consumer confidence rose more than expected this month, extending a rebound in sentiment that began with a jump in August.
The growing confidence in the U.S. economy defies recession fears on Wall Street less than a week after the Federal Reserve raised its benchmark interest rate and forecasted rising unemployment.
The Conference Board said on Tuesday its Consumer Confidence Index rose to 108.0 this month from 103.6 in August. Consumer sentiment improved both for the current state of the labor market and business conditions.
Last week, the Federal Reserve escalated its fight against inflation by raising borrowing costs 0.75% — a repeat of the same hike it imposed at each of the last two meetings. Prior to this year, the Fed last matched a hike of this magnitude in 1994.
The central bank said additional rate hikes would likely follow.
The data from the Conference Board signals resilient consumer confidence, which could sustain consumer spending.
The Fed, which aims to fight inflation by slowing the economy, may see the data as a sign that it should continue its significant rate hikes. The approach, however, risks tipping the U.S. into an economic downturn and putting millions out of work.
Before the Consumer Confidence Index jumped in August, it had dropped for three consecutive months. It reached its lowest point of the year in July.
The present situation index, which measures consumer sentiment toward current business and labor market conditions, rose to 149.6 from 145.3 last month. The expectations index, which assesses the short-term outlook for income, business and labor market conditions, jumped to 80.3 from 75.8.
The persistence of elevated prices has weighed on U.S. consumers and investors for well over a year. A higher-than-expected inflation report this month sent the S&P 500 tumbling for its worst day of 2022.
Inflation data showed that prices rose unexpectedly in August from the month prior but the overall year-over-year inflation rate fell slightly to 8.3%.