(Bloomberg) -- Consumer confidence increased in April to thesecond-highest level in more than eight years as Americans grewmore upbeat about their financial prospects.

The University of Michigan said Friday that its final index forthe month increased to 95.9 from 93 in March. The median projectionin a Bloomberg survey of economists was for 96, little changed fromthe preliminary April reading of 95.9.

A stronger sense of job security and building momentum in wage growth are helping to buoy confidence,which may encourage consumers to spend rather than save theirpaychecks. Low fuel costs and continued labor market progress willhelp keep households upbeat even as the Federal Reserve considersraising interest rates for the first time since 2006.

“Confidence is down from its absolute high in the last couplemonths, but it still shows a clear net pickup recently,” JimO’Sullivan, chief U.S. economist at High Frequency Economics inValhalla, New York, said before the report. “The confidence numberslook consistent with consumer spending picking up.”

Estimates in the Bloomberg survey of 59 economists ranged from93 to 97.5. The index average 84.1 last year.

The sentiment survey’s current conditions index, which takesstock of Americans’ views of their personal finances, rose to athree-month high of 107 in April from 105.

The measure of expectations six month from now increased to 88.8from 85.3.

“Personal financial prospects have improved significantly,”Richard Curtin, director of the Michigan Survey of Consumers, saidin a statement. “Financial gains were expected by 37 percent of allconsumers in April. Although just above the 36 percent recorded inthe prior two months, it was the highest proportion recorded sinceApril 2007.”

Inflation Expectations

Americans expected an inflation rate of 2.6 percent in the nextyear, down from 3 percent in March. Over the next five to 10 years,they also expect a 2.6 percent rate of inflation, compared with 2.8percent in the previous month.

Friday’s consumer sentiment report is at odds with other figuresreleased this week. The Bloomberg Consumer Comfort Index fell to44.7 in the period ended April 26, the third consecutive drop, from45.4 the prior week.

The Conference Board’s consumer confidence index dropped to afour-month low of 95.2 in April, weaker than the most pessimisticforecast in a Bloomberg survey of economists.

Fed policy makers are keeping an eye on consumer attitudes,inflation and other markers of economic health as they weigh thetiming of their first increase in the benchmark interest rate since2006. The outlook took a hit this week as a report showed theeconomy barely grew in the first quarter, expanding at a 0.2percent annual rate after a 2.2 percent in the final three monthsof 2014.

Economic Outlook

“Overall, the near- and longer-term outlooks for the economy,while slightly below the peaks recorded three months ago, were thesecond-most favorable levels recorded since 2004,” Curtin said.“Prospects for the unemployment rate in April were only morefavorable in four other surveys since 1984.”

In a statement issued Wednesday after a two-day meeting, Fedpolicy makers left open the possibility of raising interest ratesin the second half of the year by chalking the economy’s slowdownup to “transitory factors.”

“Households’ real incomes rose strongly, partly reflectingearlier declines in energy prices, and consumer sentiment remainshigh,” Chair Janet Yellen and her colleagues said in the statement.“Although growth in output and employment slowed during the firstquarter, the Committee continues to expect that, with appropriatepolicy accommodation, economic activity will expand at a moderatepace, with labor market indicators continuing to move toward levelsthe Committee judges consistent with its dual mandate.”

Fed View

The Fed repeated that it will raise rates when it sees furtherlabor-market improvement and is “reasonably confident” inflationwill rise back to its 2 percent goal over time.

Bigger pay gains might help price increases get closer to thattarget. Wages and salaries climbed by 0.7 percent following a 0.6percent increase in the fourth quarter, the Labor Department saidThursday. Private wages, which exclude those government workers,rose 2.8 percent in the last year, the biggest advance since thethird quarter of 2008.

In the meantime households may be counting on continued savingsfrom cheap gasoline to help pad their balance sheets. While theaverage cost of a gallon of regular gasoline was $2.58 on April 29,the highest since mid-December, it’s down from last year’s peak of$3.70.

La Quinta

Cheap gas may persuade more Americans to hit the road,benefiting companies such as midscale hotel owner and franchiser LaQuinta Holdings Inc., Chief Executive Officer Wayne Goldberg saidon an April 29 earnings call.

“We feel very good that all of the indications from a leisurestandpoint are very positive,” Goldberg said. “We see an economyimproving.”

More gains in consumer confidence may persuade households toboost spending, which was lackluster in the first quarter.Consumption climbed at a 1.9 percent annualized rate in the firstthree months of the year, less than half the pace of the priorthree months, when spending climbed at the fastest rate since2006.

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