Consumer mood brightens

Consumer spending makes up almost 70% of total output in the US, and fears of job losses and uncertainty in the outlook have hobbled spending, sending the the economy into a tailspin. That's why today's unexpectedly-large jump in the Consumer Confidence Index portends an improvement in trends may be around the corner.

The survey of 5,000 households showed that consumer confidence increased from 26.9 in March to 39.2 in April, with the Present Index rising modestly while the Expectations portion of the survey improved considerably. Despite rising unemployment and steady layoffs, the public is starting to feel better about job prospects. And if consumers start to feel more comfortable with their personal economic situation, they may be more inclined to spend, lending support to economic activity.

Wall Street liked what it saw in the numbers, helping shares erase early losses. Still, the index is hovering well south of the 100 mark, which was seen when the economy was expanding.

Meanwhile, tomorrow's first look at 1Q GDP and the conclusion of the Fed's two-day meeting will come into focus. Gross Domestic Product is the broadest measure of economic activity and encompasses the value of all goods and services produced. Most economists see another steep drop of about 5% on an annualized basis, but recent data suggest we will see some improvement from here.

The Fed's press release and interest rate decision out in the middle of the day tomorrow is always closely followed by analysts and traders. Policymakers will likely keep the fed funds rate at rock-bottom levels so their take on the economy and a read on the many unconventional measures taken so far to support economic activity will be highly sought after.