US consumer confidence climbs to a two-year high as inflation drops

Economists closely monitor Americans' spirits because consumer spending accounts for around 70 percent of US economic activity. The Conference Board index fell more or less steadily from mid-2021 to mid-2022 as surging prices ate into household budgets. But confidence has come back, in fits and starts, over the past year as inflation eased in the face of 10 interest-rate hikes by the Federal Reserve. Fed policymakers are expected to raise their benchmark rate again Wednesday to the highest level in 22 years.

The US economy — the world's largest — has proved surprisingly resilient in the face of sharply higher borrowing costs. Employers are adding a strong 2,78,000 jobs a month so far this year; and at 3.6 percent in June, the unemployment rate is not far off a half-century low.

Tumbling inflation and sturdy hiring have raised hopes the Fed just might pull off a so-called soft landing — slowing the economy just enough to tame inflation without tipping the United States into recession.