The University of Michigan's measure of consumer confidence shot up to a five-year high of 83.1 in October, from 78.3, but we're not convinced this upturn will lead to faster consumption growth. For a start, the surge in confidence is hard to square with the economic fundamentals. Admittedly, gasoline prices fell marginally and the recovery in housing may have played a role. But equity prices have fallen back too, employment growth remains lacklustre and, unless Congress acts to avert the fiscal cliff, households are only two months away from a big jump in marginal tax rates.
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