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Associated Press
The consumer confidence index rose to 90.9 in July, according to a Conference Board report. As consumers become more optimistic, they tend to spend more, such as this family shopping at a Costco in Plano, Texas, which in turn fuels the economy.

Consumer confidence leaps to 90s

U.S. consumers are more confident about the economy than they have been in nearly seven years.

The Conference Board said Tuesday that its confidence index rose to 90.9 in July from an upwardly revised 86.4 in June. The July reading is the highest since October 2007, two months before the recession officially began.

It was the third consecutive increase in the index. Economists said strong job growth has helped boost consumers’ assessment of current conditions and also improved their outlook on jobs and the economy.

“Americans felt a heck of a lot more confident in July,” said Jennifer Lee, senior economist at BMO Capital Markets. She said part of the confidence boost likely came from declining gas prices.

Conference Board economist Lynn Franco said the improvements in consumers’ confidence and expectations about the future indicate that the recent strengthening in overall economic growth should continue in the second half of the year.

Confidence has been rising since bottoming in February 2009 at 25.3. The index is now well above last year’s average of 72.3 and with July’s gain has now returned a level above 90, where it often hovered before the recession.

Consumers’ attitudes are closely watched because their spending accounts for about 70 percent of U.S. economic activity.

For July, consumer assessment of the labor market improved with those saying that jobs were plentiful, increasing to 15.9 percent, up from 14.6 percent.

Consumers’ expectations about the future were also more optimistic; with anticipating more jobs in the months ahead increased to 19.1 percent, up from 16.3 percent in June.

The unemployment rate fell to 6.1 percent in June, the lowest level since September 2008. Employers added 288,000 jobs in June, marking the fifth consecutive month of job gains above 200,000. That is the best such stretch since the late-1990s tech boom.

Economists expect job gains to continue in coming months and will help propel stronger growth.

In the January-March quarter, economic output went into reverse, falling at an annual rate of 2.9 percent.

That drop was blamed in large part on severe winter weather. Those conditions dampened everything from trips to the mall by shoppers to factory production.

The government will provide its first look at economic activity in the April-June quarter today, and economists are predicting a solid rebound to growth of around 2.9 percent.

Analysts believe the economy will pick up even more momentum in the second half of the year, helped by further job gains providing people with more money to spend.