ANN ARBOR, MI – Data released last week by the Thomson Reuters/University of Michigan consumer sentiment index revealed the highest reading since July 2007, before the U.S. economy began its decline into the recession, the Wall Street Journal reports.

The index jumped to 83.7 from 76.4 at the end of April, far higher than the 78.0 predicted by economists.

Meanwhile, the current-conditions index in early May jumped to 97.5 from 89.9 at the end of April, while the expectations index increased to 74.8 from 67.8. The current index is the highest since October 2007, while the expectations is the best since November 2012.

The early May increase shows federal spending cuts have not impacted consumer sentiment as previously thought, with rising equity prices, falling gasoline prices and strengthening housing markets buoying confidence.

The gain was concentrated in higher-income families — those more likely to benefit from a rising stock market.

Economists at TD Securities said auto-purchase intentions are the highest since 2005, “A positive for the ongoing economic recovery.” Plans to buy durable goods also hit a post-crisis high.

All is not looking up, however: Forecaster cautioned consumers are unlikely to embark on spending binges, the result of limited disposable income growth.

"If sustained at its current level, the outlook index is consistent with real consumers' spending rising by about 2.5% [year over year], not bad but still not great," wrote Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors.