Consumer confidence hit an eight-month high in January. The increase suggests the rising spirits that fueled a holiday shopping boom are carrying over into the new year as people feel better about the job market.
The Conference Board said Tuesday its Consumer Confidence Index rose to 60.6 this month from 53.3 in December.
While confidence is still far from the 90 that signals a healthy consumer mind-set, the improvement was better than expected. Some economists said the big tax-relief package that Congress passed in late December may have helped.
"So much for a ho-hum January," said Jennifer Lee, senior economist at BMO Capital Markets. "The signing of the stimulus bill, and all that it is intended to bring, is buoying sentiment."
The $858 billion package extended the Bush-era tax relief at all income levels for two years, provided tax breaks for businesses and reduced Social Security payroll taxes by 2 percentage points this year.
The Social Security reduction means about $1,000 a year in additional after-tax income for the average family, according to White House estimates.
Other analysts suggested that the recent gains in the stock market and improving labor market conditions were trumping higher gasoline prices and falling home prices.
The Standard & Poor's/Case-Shiller 20-city index showed home prices falling in most of America's largest cities and hitting their lowest point in nine markets since the housing bust.
The January rise in confidence is a good sign for consumer spending, said David Wyss, chief economist at Standard & Poor's in New York.
"A confident consumer buys a new car," he said. "A cautious consumer repairs the old one."
The January confidence figure was the highest since May's 62.7. At that time, consumer attitudes were improving as economic growth seemed to be taking off. However, the economy stalled in the summer, and so did confidence.
Confidence has been depressed by unemployment that surged during the country's worst recession since the 1930s and has stayed stubbornly high even though the downturn ended in June 2009. Confidence has not been above 90 since the recession began in December 2007.
In the Conference Board survey, the percentage of people surveyed who felt jobs were hard to get fell slightly to 43.4 percent from 46 percent in December. The share who expected to see more jobs six months from now rose to 16 percent from 14.2 percent.