US consumer confidence hit a two-year high in January, as Americans grow more optimistic that inflation is coming under control.
The Consumer Confidence Index rose to 114.8 this month, up from 108.0 in December, The Conference Board reported on Tuesday. It is the highest since December 2021 and the third consecutive monthly increase.
Recession fears are also falling. The Expectations Index increased to 83.8, up from 81.9 in December. A reading below 80 signals consumers forecast a recession.
“January’s increase in consumer confidence likely reflected slower inflation, anticipation of lower interest rates ahead, and generally favourable employment conditions as companies continue to hoard labour,” said Dana Peterson, chief economist at The Conference Board.
Tuesday's report comes as the Federal Reserve began its two-day policy meeting. The central bank is expected to hold interest rates steady between 5.25 and 5.50 per cent, and also continue to discuss when it will begin cutting them.
The optimism is reflective of the brightening US economic picture, in which inflation has significantly climbed down to the Fed's long-term 2 per cent goal. The central bank's preferred metric fell to 2.9 per cent last month.
The Conference Board also reported consumers' were more optimistic on business conditions in January. Of those surveyed, 45.5 per cent said jobs were “plentiful”, up from 40.4 per cent in December.
A separate report from the Labour Department on Tuesday showed job openings increased to their highest level in three months, showing that the labour market remains strong.
Employers posted nine million job openings last month, according to the department's Job Openings and Labour Turnover Summary.
