American optimism toward economy surges to 9-month high as job market hums

• American households were more optimistic about the economy this month.
• The University of Michigan said its index of consumer sentiment jumped to 99.8, just below the cyclical peak.
• A historically strong labor market helped offset a wave of potential concerns, including the impeachment trial of President Donald Trump and developments abroad.
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American households were more optimistic about the economy this month as a historically strong labor market helped offset a wave of potential concerns, including the impeachment trial of President Donald Trump and developments abroad. 

The University of Michigan said Friday its index of consumer sentiment in January jumped five basis points to 99.8, a nine-month high and just below the cyclical peak of 101.4. Economists expected a final reading of 99.1.

The gains came even as the Senate began an impeachment trial against Trump on national television. The outbreak of a coronavirus in China and elsewhere has also raised concerns about the economic outlook in recent weeks. In early January, tensions with Iran escalated sharply. 

Consumers were able to tune out those concerns largely because of the humming labor market, according to Richard Curtin, the chief economist of the survey. While growth in job gains is showing signs of slowing, the unemployment rate is at its lowest level in half a century.

"The maintenance of consumer sentiment near cyclical peak levels is surprising," Curtin said. "The resilience of consumers is remarkable and due to record low unemployment, record gains in income and wealth, as well as near record lows in inflation and interest rates."

About 53% of consumers reported gains in personal finances in January. Combined net changes in household income and wealth were cited in 40% of all mentions in January, according to the survey, comparable to peaks in 1966 and 2000.