Mood index soars in April

NEW YORK | Hopeful signs that the worst may be over for the economy boosted Americans’ moods in April, sending a closely watched barometer of sentiment to the highest level since November.

The New York-based Conference Board said Tuesday that its Consumer Confidence Index rose more than 12 points to 39.2, up from a revised 26.9 in March. The reading marks the highest level since November’s 44.7 and well surpasses economists’ expectations for 29.5.

The consumer confidence survey showed a substantial improvement in consumers’ short-term outlook, including even their assessment of the job picture.

Some encouraging news in areas such as retail sales and housing have helped fuel a recent stock rally. A housing index showed Tuesday that home prices dropped sharply in February, but for the first time in 25 months the decline was not a record - another sign the housing crisis could be bottoming.

Improvements in the stock market have helped boost shoppers’ moods, said Gary Thayer, chief economist at Wachovia Securities, but major economic problems remain - and that means confidence could bounce up and down for awhile, he said.

Economists closely monitor consumer sentiment because consumer spending accounts for more than two-thirds of economic activity.

The huge jump in confidence follows a small increase in March, following a free fall in February. Still, the index remains well below year-ago levels of 62.8.

The April gains were fueled by “a significant improvement in the short-term outlook,” Lynn Franco, director of the Conference Board Consumer Research Center, said in a statement.

She added that the index measuring how shoppers feel now, which posted a moderate gain, offered “a sign that conditions have not deteriorated further and may even moderately improve in the second quarter.”

The Present Situation rose slightly to 23.7 from 21.9 last month. The Expectations Index, which measures how shoppers feel about the economy over the next six months, skyrocketed to 49.5 from 30.2 in March.

That sharp increase - which marked the largest jump since a 13-point gain in November 2005 when the economy was recovering from Hurricanes Katrina and Rita - suggests that people believe the economy is nearing a bottom, Ms. Franco said. Still, she noted that the index remains well below the level associated with strong economic growth.

“It looks like the worst is behind us, but clearly we are not out of the woods,” Ms. Franco said.