U.S. consumer sentiment improved to a three-year high in early January, propelled by falling gasoline prices and a favorable view of personal finances and economic growth, a survey showed.
The Reuters/University of Michigan Surveys of Consumers said its preliminary January reading on consumer sentiment index rose to 98.0 from 91.7 at the end of December.
This was the highest since 103.80 in January 2004 and well above the 92.3 average analyst estimate.
"Definitely, this was a nice upside surprise that continues the run of generally favorable U.S. data that have tempered concerns about the health of the economy," said Alex Beuzelin, a senior market analyst at Ruesch International, in an interview with Reuters. "This will further put to rest the notion of an early Fed rate cut."
In an interview on CNBC's "Morning Call," Argus Research Director of Economic Research Richard Yamarone said there are a number of factors stimulating consumer spending. These include the low level of unemployment, lower energy prices, and an estimated $24 billion in gift cards for consumers to use on purchases, he said.
"We're talking about a locomotive right now," Yamarone said. "The consumer is carrying this economy."
The survey's gauge of current consumer conditions was 112.5 against a final December reading of 108.1, while its measure of consumer expectations was 88.7 versus 81.2.
Consumers, while generally upbeat, remain worried about inflation. The survey's one-year inflation index edged up to 3.0% from 2.9% in late December, and its five-year index stood at 3.0% for a third straight month.