With yesterday morning’s awful report on 1Q GDP, many people quickly forgot that another report on Tuesday showed consumer confidence rose this month to the highest level since January 2008. Remember that consumer spending makes up almost 70% of GDP, so rising consumer confidence is a big deal.

Despite that, yesterday’s report from the Commerce Department showing that 1Q GDP plunged by much worse than expected to -2.9% (annual rate) got all the headlines. I will discuss the worrisome GDP report in more detail in next Tuesday’s E-Letter. For today, let’s look at the encouraging Consumer Confidence Index report this week, and a few other economic reports of late.

The latest Conference Board Consumer Confidence Index (CCI) for June was released Tuesday morning, based on data collected through June 13. The headline number of 85.2 was a significant improvement over the revised May final reading of 82.2. The latest CCI report beat the consensus forecast of 83.5. The current level is the highest since January 2008.

Better yet, the internals of the report looked strong as well. Both the ‘present situation’ and ‘future expectations’ components improved in June, and consumers expressed more optimism about both current and expected employment conditions over the next six months.

Buying plans for automobiles, homes and major appliances also improved during the month. The only caveat is that the cutoff date for the survey was June 13, so the latest figures likely do not reflect much reaction to the unfolding illegal alien crisis on the Texas border, nor the bad news coming out of Iraq which is driving oil and gas prices higher.

While the improvement in consumer confidence since the recovery began in 2009 is encouraging, it is also important to keep in mind where it is in the long-term perspective. As you can see in the chart above, confidence is still far below the levels seen in the late 1980s and late 1990s. That is indicative of the sub-par economic recovery.

The lack of strong job growth over the last few years is the primary reason consumer confidence has been so slow to recover. However, employment conditions have taken a turn for the better recently. Stronger gains in nonfarm employment and the recent slide in the unemployment rate are evident in the latest consumer confidence survey.

The proportion of households noting that jobs were more plentiful in June rose 0.5 percentage points to 14.7%, while the share stating that jobs are hard to get fell 0.4 points to 31.8%. Although the difference between those two responses still remains negative, it has improved considerably over the past couple of months.

In other news, the housing sector has been a disappointment this year largely due to higher interest rates late last year and earlier in 2014. However, with the recent unexpected decline in long-term interest rates, the housing market is making a comeback. New and existing home sales rebounded in May and beat expectations.

New home sales in May rose to 504,000 units, up over 18% from 433,000 in April and well above the pre-report consensus of 425,000. Existing home sales in May were 4.89 million, up from 4.66 million in April and beat the pre-report consensus of 4.75 million.

Earlier this week, the National Association of Realtors reported that the median existing home sale price across the nation rose to $213,400 in May. That’s a gain of 5.1% from a year ago. RealtyTrac, another source of home price data, says that existing home sale prices are up 13% year-over-year – if you include foreclosure sale prices.

Of course, existing home sale prices vary widely around the country, and your personal home price may not have increased by either 5.1% (NAR) or 13% (RealtyTrac), depending on the economy in your area.

And there’s another reason why median home prices are rising more than expected this year. Median home prices keep rising primarily because of increasing sales of higher-end homes that are skewing the median home price figure upward. There are two reasons for this.

First, the volume of bargain-priced foreclosures continues to shrink. RealtyTrac’s report says foreclosures and short sales accounted for 14.3% of home sales in May, down from 15.9% a year ago. The median price of distressed homes was $120,000 versus $190,000 for non-distressed, which explains how having fewer troubled properties in the mix would cause prices to rise.

Second, so-called “move-up buyers,” those buying the $500,000-plus homes, are in better financial shape. They have the credit scores to qualify for a mortgage. They are also more likely to have equity in their current home they can use for a new down payment as well as investments.

I’ll leave it there for today. Hope you’re having a great summer!