Consumer confidence rebounded more than forecast in December as Americans grew more optimistic about the current state of the economy and job market.

The Conference Board’s sentiment index climbed to 96.5 from a revised November reading of 92.6 that was higher than previously estimated, the New York-based private research group said Tuesday. The median forecast in a Bloomberg survey of economists called for 93.5. 

The combination of a strong labor market and cheap fuel costs have buoyed households’ finances, giving them the wherewithal to purchase everything from cars to clothing and holiday gifts. Faster growth in wages would usher in bigger gains in confidence and probably provide another boost to consumer spending, the biggest part of the economy.

“Some of the primary things boosting confidence are strong labor market conditions and perhaps more importantly, low gasoline prices,” said Thomas Simons, a money-market economist at Jefferies Group LLC in New York. “On the margin, it should increase consumers’ propensity to spend.”

The share of Americans who see greater job availability in the next six months increased, and fewer expected their incomes to decline, the report showed.

David Fuller's view

OK, this is only a monthly report, reducing by a little more than a third of the decline in consumer confidence seen in October and November.  Moreover, this indicator has been in a range between 91 and 104 since October 2014 (see graph in the article above).

What I find particularly interesting is the comment that sentiment improved mostly for young adults below the age of 35.  In comparison, it barely changed for those from 35 to 54 years old, and declined after the age of 55. 

Confidence among young adults usually confirms that the economy is improving.  If this trend continues, it is about more than just lower gasoline prices and somewhat better job prospects.  Young adults represent future potential and this generation is better qualified than any other to deal with rapidly changing technological innovation, a vital field in which the US is also the global leader.