The preliminary October reading on the Thomson Reuters/University of Michigan Consumer Sentiment Index rose to 86.4, a level not seen since July of 2007. A survey of economists by Bloomberg had a consensus estimate of 84.4, down from a final September reading of 84.6.

The survey’s measure of current economic conditions remained unchanged at 98.9, well above the consensus estimate of 98.0. The subindex measuring consumers’ expectations rose from 75.4 to 78.4, the highest reading since October 2012. Expectations for one-year inflation fell from 3.0% in September to 2.8%, and five-year to 10-year inflation expectations remained unchanged at 2.8%.

The survey’s director noted, “The data show absolutely no signs that fear and panic is about to overtake the consumer sector.” He was referring to “broader concerns about the global economic meltdown, escalating military conflicts, and rising concerns about Ebola,” according to a report at Reuters.

Tumbling pump prices for gasoline are certainly contributing to the boost in consumer sentiment. Gasoline prices are at the lowest level in almost four years, and crude oil prices are down about $18 a barrel since mid-July. When consumers pay less for gasoline, they have more cash available for discretionary purchases. That extra cash does wonders for one’s outlook on the economy.

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