Consumer confidence continued to improve in March, rising one point over February, according to a University of Michigan-Thomson Reuters survey.
The index was up to 78.6 – an increase of 3.1 percent over last year – thanks to signs of more employment and rising home prices, according to Thomson Reuters.
The problem facing consumers now is insignificant income increases as half of consumers surveyed said they expect price increases to exceed income gains over the year. Cuts in federal spending and an increase in payroll taxes are expected to slow economic growth.
Surveys of Consumers Chief Economis Richard Curtin said that while confidence slipped in early March, it rebounded due to optimism over job gains and less concern over government warnings about a economic catastrophe following budget cuts.
"This is not the first time that optimism increased following the Great Recession, but the recent gains stand a better chance to be sustained and ultimately lead to a lower unemployment rate and support consumer spending increases in the year ahead," he said.
The survey found that increases in home values were reported by the largest proportion of homeowners in more than five years, and more expected continued gains compared to the March 2007 survey. Homeowners were more willing to sell because of increasing prices and also said they were more willing to buy quickly before prices increase more.
Consumers were also optimistic with regard to purchases such as vehicles. According to the survey, light vehicle sales are expected to reach 15.6 million in 2013, up from 14.4 million in 2012.