The U.S. consumer sentiment index has reached its highest level in five years, which could be a strong indication of a steadily improving economy, especially after the unemployment rate for September fell to 7.8 percent. Shoppers are feeling more confident in their financial conditions, and retailers could see the impact of this over the next few months.

According to the Thomson Reuters/University of Michigan October reading, the overall index rose to 83.1, up from September's figure of 78.3. The current rate is the highest it has been since September 2007. As for consumer expectations, the index also rose significantly, from last month's figure of 73.5 to 79.5 for October. The source reports that the expected reading for the month was at 74. This new information, along with the recent drop in unemployment and low number of Americans filing for jobless benefits, has many economists believing that conditions are steadily improving.

"We are getting some quite interesting signals from consumer sentiment and employment data – both (the) unemployment rate and initial claims – that there has been some quite significant improvement in the economy," said David Sloan, an economist at 4Cast.

Retailers are also becoming more confident. Richard Feinberg, a professor of consumer sciences and retailing at Purdue University, states that the jumps in hiring by retailers for the upcoming holiday season are pointing to optimism within the industry.

This entry was posted by Retail Pro on Friday, October 12th, 2012 at 9:55 am .