WASHINGTON – Americans are growing more confident in the economy, an encouraging sign for President Obamas prospects on the most pivotal issue in the presidential race.
A new survey of consumer confidence rose to a seven-month high Tuesday on expectations that hiring will soon pick up. And a separate report showed home values rising steadily, signaling sustained improvement in housing.
This is like an opinion poll on the economy without the political parties attached, said John Ryding, chief economist at RDQ Economics, a consulting firm. The confidence survey says people are feeling better. If so, they are less likely to vote for change.
The Conference Boards index of consumer confidence shot up in September to the highest level since February. The jump surprised many economists because the most recent hiring and retail sales figures have been sluggish.
The increased confidence could help explain recent polls that show Obama with a widening lead over Mitt Romney in some battleground states.
The consumer confidence index is closely watched because consumer spending drives nearly 70 percent of economic activity. The index jumped from 61.3 for August to 70.3 for September. It remains well below 90, the level that is thought to signify a healthy economy.
Among those feeling more optimistic about the economy is Darlene Johnson of Silver Spring, Md., who works for the National Institutes of Health. The value of Johnsons 401(k) account has risen and home prices are up.
I feel like things are stabilizing, she said. I dont feel as uneasy as I did a few months ago.
But Johnson, who voted for Obama in 2008, remains undecided on which candidate to back.
Economists point to some key reasons why consumers have grown more confident.
Stocks are up: The Standard & Poors 500 stock index has surged nearly 15 percent this year. Gasoline prices have leveled off after rising for several months. And the broad increase in home prices is likely giving would-be buyers more confidence. When prices rise, buyers dont worry so much that a home might lose value after they bought it.
National home prices rose 1.2 percent in July compared with a year ago, according to the Standard & Poors/Case-Shiller index released Tuesday. That was the second straight month in which year-over-year home prices have increased.