The IBD/TIPP Economic Optimism Index shot up in January to its first positive reading since October 2012 as cheaper gasoline and stronger job growth give consumers the ability and desire to step up spending.
The Economic Optimism Index released Tuesday rose 3.1 points, or 6.4%, to 51.5. Readings over 50 signal optimism.
The U.S. economy has been in an expansion since June 2009, but Americans for years didn't see it that way, given sluggish GDP growth, stagnant wages and low employment levels.
But now 59% think the economy is improving vs. 37% who say it's not. Just two months ago, only 45% agreed vs. 52% who did not.
Gasoline prices have plunged 42% from their April 2014 peak to $2.13 a gallon as of Monday.
The U.S. added 2.952 million jobs in 2014, the biggest annual payroll gain since 1999. That included a gain of 252,000 jobs in December.
The index's 3 major subindexes all rose.
The 6-month outlook index rose 4.4 points, or 9.1% to 52.9 — the sixth straight monthly increase.
The personal finances outlook index edged up 0.8 point, or 1.2%, to 57.2.
The confidence in federal economic policies gauge leapt 3.9 points, or 10.2%, to 44.3. While still below 50, the measure has risen 6.5 points since just before the midterm elections in which Republicans retook control of the Senate and added to their House majority.
Republicans showed the biggest two-month increase in confidence in federal economic policies, albeit from a low base.
The overall Economic Optimism Index remained partisan, though readings for Republicans, Democrats, and independents all hit recent highs.
The Democrats' reading rose to 65.1 from 62.2 two months ago. Republicans rose 7.7 points to 38.2. Independents advanced 5.1 points to 49.1, the best in nearly four years.
Investors' overall optimism gauge rose to 53.8, a four-year best. Noninvestors are at 48.
Overall, 14 of the 21 demographic groups that IBD tracks had readings above 50. Nineteen of the 21 showed gains vs. December.
Separately, the National Federation of Independent Business said Tuesday that its small-business confidence gauge rose 2.3 points in December to 100.4, the highest since October 2006.
The shares of small-business owners planning to boost capital spending and to add staff both reached seven-year highs.
The IBD/TIPP Poll surveyed 867 people from Jan. 5-8. The poll has a margin of error of plus or minus 3.4 percentage points.