Consumers felt better about the short-term outlook for the economy in April as expectations about the pace of inflation and concerns about the labor market eased.
Even so, the overall consumer confidence reading was low by historical standards, and in a reminder of some of the weaker spots in the economy, a separate report on Tuesday showed the housing market continues to struggle: home prices fell for an eighth straight month in February, inching closer to an April 2009 trough.
The Conference Board, an industry group, said its index of consumer attitudes rose to 65.4 in April from a revised 63.8 in March. The reading topped analysts' forecasts for 64.5. March was originally reported as 63.4.
The present situation index climbed to its highest since November 2008, rising to 39.6 from 37.5 the month before. The expectations index climbed to 82.6 from 81.3, and consumers' expectations for inflation in the coming 12 months fell to 6.3 percent from 6.7 percent.
Despite the fall in the proportion of those who said jobs were hard to get, to 41.8 percent from 44.4 percent the month before, the longer term view was mixed.
Those expecting more jobs in the next six months declined to 17.5 percent from 19.6 percent, while those anticipating fewer jobs in the months ahead also declined to 19 percent from 20.5 percent.
"Confidence improved in April, but consumers remain far from optimistic," Chris Low, chief economist with FTN Financial Group, wrote in a note.
Higher energy prices from the political unrest in the Middle East and North Africa have weighed on consumers lately and there has been debate over whether the price increases will be temporary.
"In our view, confidence is not likely to go up meaningfully until gas prices and unemployment come substantially down," Wells Fargo said in a note.
The U.S. economy faces new headwinds from soaring oil prices, U.S. Treasury Secretary Timothy Geithner said on Tuesday, but he said a forecast of 3 to 4 percent growth seemed reasonable.
HOUSING PRICES SCRAPE 2009 LOWS
The consumer data gave U.S. stocks a lift, as did solid earnings from bellwether companies.
Separate data on Tuesday showed the housing market continues to struggle as U.S. single-family home prices fell for an eighth straight month in February, inching closer to an April 2009 trough.
The S&P/Case-Shiller composite index of 20 metropolitan areas declined 0.2 percent in February from January on a seasonally adjusted basis, slightly better than economists' median forecast for a drop of 0.3 percent.
The 20-city composite index was at 139.27, holding just a hair above its 2009 low of 139.26. Average home prices across the United States are back to levels where they were in the summer of 2003, S&P said.
Prices in the 20 cities have fallen 3.3 percent year over year, in line with expectations.
"There is very little, if any, good news about housing. Prices continue to weaken, trends in sales and construction are disappointing," David Blitzer, chairman of the Index Committee at S&P Indices, said in a statement.
The glut of houses up for sale has kept prices low and the market has struggled to regain traction since a home buyer tax credit expired last spring.
Other data in the last week has suggested some stabilization in the market with sales of new and existing homes rising in March.
"House prices are still falling due to distressed sales. But the pace of price decline is slowing so things seem to be stabilizing," said Rudy Narvas, senior economist at Societe Generale in New York.
Focus was also on the Federal Reserve officials meeting Tuesday and Wednesday with the discussion likely to focus on the central bank's next move in its monetary stimulus policy.
The Fed looks certain next week to stick to its plan to complete its $600 billion bond-buying program in June, and is unlikely to rush to tighten policy given an uncertain economic outlook.
(Additional reporting by Richard Leong; Editing by Padraic Cassidy)
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