Consumer sentiment in the U.S. soared this month to the highest level in almost two years as easing inflation and a strong job market fueled optimism, according to a survey by the University of Michigan.

The preliminary July University of 🍒Michigan Index of Consumer Sentiment (MCSI) soared 12.7% from June to a reading of 72.6. It hasn’t been that high since September 2021. The measure of current economic conditions rose 12.3% to 77.5, and the Index of Consumer Expectations 🐠was up to 69.4, 𒊎a 12.8% jump.

Joanne Hsu, the director of the school’s survey of consumers, said that the gain in sentiment was “largely attributable to the continuedꦯ slowdown in inflation along with stability in labor markets.”

She noted that the index was now about halfway between the all-time low of 50 in June of last year, and the pre-pandemiꦕc reading of 101 in February 2020. 

Hsu noted that survey participants believed annual inflation a year from now would be 3.4%, up slightly from 3.3% in June. The outlook for inflation in five years also ticked up by one tenth of a percentage point to 3.1% from 3%.