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Everything we're hearing from US consumers right now is great

Consumers power the US economy.

And everything consumers are saying right now is great.

On Tuesday, two data points reinforced the strength of the consumer, with third quarter personal consumption revised higher while November’s consumer confidence reading from The Conference Board rose to the highest level in nine years.

Consumer spending accounts for about 70% of GDP.

In the third quarter, personal consumption rose 2.8%, better than the 2.1% previously reported by the BEA. This was a slight decline from the second quarter — when consumption rose 4.3% — but still shows strength from consumers.

Source: FRED
Source: FRED

The Conference Board’s consumer confidence reading for November, meanwhile, hit 107.1, the highest since July 2007 and well above what economists had expected.

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“Consumer confidence improved in November after a moderate decline in October, and is once again at pre-recession levels,” said Lynn Franco, Director of Economic Indicators at The Conference Board.

“A more favorable assessment of current conditions coupled with a more optimistic short-term outlook helped boost confidence,” Franco added. “And while the majority of consumers were surveyed before the presidential election, it appears from the small sample of post-election responses that consumers’ optimism was not impacted by the outcome.”

In a note to clients following the report, economists at Capital Economics said, “Despite the fact that Hillary Clinton won the popular vote, this report provides further evidence to suggest that the shock win for Donald Trump has had a positive impact on sentiment. That reaction has presumably been helped by the recent rally in the stock market to a record high, and the gradual improvement in labour market conditions.”

And Tuesday’s Conference Board reading follows last week’s University of Michigan consumer survey, which indicated consumers reacted positively to the election.

“The upsurge in favorable economic prospects is not surprising given Trump’s populist policy views,” that report said, “and it was perhaps exaggerated by what most considered a surprising victory as well as by a widespread sense of relief that the election had finally ended.”

And so while the UMich survey showed, perhaps, a more direct impact from the election, The Conference Board’s reading says more about the internal strength of US consumers.

Consumers’ view on current economic conditions improved notably, with 29.2% of respondents saying business conditions are “good” while 14.8% characterized conditions as “bad.” These were changed from 26.5% and 17.3%, respectively, in last month’s survey.

“With the holiday season upon us, a more confident consumer should be welcome news for retailers,” Franco said.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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