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Americans are feeling more optimistic about the economy for the first time in four months - but they still fear a recession
Americans' view of the economy improved in May - for the first time since January - amid optimism about the jobs market.
Despite the better perception of the job market, worries about inflation persisted and many households expected higher interest rates over the next year.
And the survey from the Conference Board on Tuesday also showed more consumers think that the economy could slip into recession in the next 12 months.
Nonetheless, they were very upbeat about the stock market and more planned to buy major household appliances over the next six months.
US consumer confidence unexpectedly improved in May after it had fallen for three straight months.
The positive outlook comes after several leading US bankers - including JPMorgan boss Jamie Dimon - issued oninous warnings about the economy.
Americans' view of the economy improved in May - but they were still worried about rising prices
The economy is expected to slow this year as a result of a string of interest rates hikes from the Federal Reserve since March 2022 - designed to tame inflation.
But, despite the cooling effect of the rate rises on growth, economists and most business executives are not forecasting a downturn.
'Continued positive job growth, rising wages, an ebullient stock market and healthy household balance sheets will keep consumers spending despite elevated prices and borrowing costs,' said Oren Klachkin, financial market economist at Nationwide.
The Conference Board said that its consumer confidence index increased to 102.0 this month from an upwardly revised 97.5 in April.
Economists polled by Reuters had forecast the index slipping to 95.9 from the previously reported 97.0. It outperformed the University of Michigan's sentiment index.
Confidence remains within the relatively narrow range it has been hovering in for more than two years.
The improvement was across all age groups, with consumers making annual incomes over $100,000 posting the largest increase in confidence.
On a six-month moving average basis, confidence remained highest among the under-35 age cohort and those with annual incomes of more than $100,000.
Consumers' perceptions of the labor market also improved, with the survey's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, widening to 24 from 22.9 in April, though opportunities are probably not as abundant as in the past year.
'The level of this measure remains elevated by historical standards and points to a still strong labor market,' said Michael Hanson, an economist at JPMorgan.
The measure closely correlates to the unemployment rate in the Labor Department's employment report. Labor market resilience, mostly characterized by historically low layoffs, is underpinning the economic expansion.
The latest official figure for inflation showed it had cooled slightly to 3.4 percent in April from 3.5 percent in March. Americans feel like it is higher
Consumers' 12-month inflation expectations rose to 5.4% from 5.3% in April. That is much higher than official figures, which showed it had cooled slightly to 3.4 percent in April from 3.5 percent in March.
'Consumers cited prices, especially for food and groceries, as having the greatest impact on their view of the U.S. economy,' said Dana Peterson, chief economist at the Conference Board.
'Perhaps as a consequence, the share of consumers expecting higher interest rates over the year ahead also rose, from 55.2% to 56.2%.'
About 48.2% of consumers in the survey expect stock prices to increase over the coming year, compared to 25.4% anticipating a decrease.
Stocks on Wall Street were trading higher, with the technology-heavy Nasdaq index breaching the 17,000 level for the first time. The dollar fell against a basket of currencies. U.S. Treasury prices were lower.