Consumer confidence, boosted by rising home prices, by a rising stock market, and perhaps by improving job growth, has never been better this recovery. The consumer confidence report, posted on Tuesday, shows a recovery best for May followed now by the consumer sentiment report where the composite index is at 84.5, up a very big and higher-than-expected 8.1 points from April. May's reading is at the very high-end of the Econoday consensus range.
A breakdown between the first half, when the index came in at 83.7, and the second half shows the strongest acceleration taking in place in the first half but extending strongly, though at a slightly slower rate, through the second half where the implied reading is 85.3.
Both components of the composite -- current conditions and expectations -- show strong gains with current conditions at a recovery best of 98.0. The comparison with April's 89.9 hints at wide strength across the economic calendar.
Expectations, at 75.8, have been higher but not by much and that was in October and November which was before the series of shocks that began to hit confidence: the year-end fiscal cliff, the first-of-the-year payroll tax hike, and the March sequester.
It's the passing of just these shocks that is also lifting spirits. Another factor lifting spirits is a lack of inflation which gives consumers more confidence in their spending power. One-year inflation expectations are at 3.1 percent, unchanged from mid-month and from April, with 5-year expectations at 2.9 percent, unchanged from April and up 1 tenth from mid-month.