By Sarah Chaney 

Economic confidence among lower-income Americans has taken a recent leap, the latest evidence that benefits of the economic expansion are reaching a broader swath of workers.

Sentiment among lower-income consumers still trails that of their higher-earning counterparts. But the gap has narrowed in recent months.

In the University of Michigan's consumer-sentiment index, confidence among households in the bottom third income tier has risen 11.4 points since February, an IHS Markit analysis of sentiment figures shows. Meanwhile, sentiment among Americans in the highest third of incomes has fallen more than eight points.

The recent improvement in confidence for lower-income Americans coincides with a falling unemployment rate and faster wage growth for workers at the margin. Among those experiencing labor-market gains are the less-educated and African-Americans, who trailed behind other groups for much of the economic expansion beginning in mid-2009.

A tightening labor market and increased take-home pay from the tax cut passed in December are likely translating into a renewed sense of confidence among lower-income Americans. These factors outweigh any decreased confidence stemming from a rise in gas-pump prices, said Chris Christopher, IHS Markit executive director.

"You say to a lower-income person..'Hey, you have [an] extra $50, $100 a month, that really makes a big difference. With that, they'll go out to eat more," Mr. Christopher said.

Overall consumer sentiment rose after the election of President Donald Trump and has remained strong. The University of Michigan on Friday said its preliminary reading on consumer sentiment in June rose, propelled by Americans' greater optimism toward the economic situation.

The IHS Markit analysis of the sentiment data shows confidence has fallen about seven points among households with incomes of more than $75,000 since February. Over the same period, optimism has risen eight points for households with incomes of less than $75,000.

Toncé Jackson-Ayanleye, 47 years old, is feeling increasingly positive about her job and income. She worked in positions making about $10 an hour before she graduated from a manufacturing career-training program and landed a job as a welder at Freedman Seating Co. in Chicago last spring. Ms. Jackson-Ayanleye's income rose 50%.

"I'm making far more money than I have ever made with any job," said Ms. Jackson-Ayanleye. "What the future holds, I really can't say. I just want to be prepared and ready for whatever comes my way. The sky's the limit."

Workers nationwide who didn't share in the economic gains earlier in the recovery are getting pulled in from the sidelines.

The jobless rates for African-American and Latino workers are near record lows. The unemployment rate for black men was as high as 19.3% in March 2010, but was down to 6.3% in May. The jobless rate for those without a high-school diploma -- who constitute much of the low-wage workforce -- touched a 25-year low late last year, and has held below 6% this year.

A tightening labor market should in theory boost wages. Recent evidence suggests this is occurring for the less-educated.

Witnessing other Americans finding jobs, as well as receiving increased skills training and access to services like child care, is helping boost sentiment among lower-income Americans, said Maurice Jones, chief executive at Local Initiatives Support Corp., which focuses on community development.

"What folks are seeing around them are companies hiring," Mr. Jones said. "That gives people some confidence and optimism about their chances of either getting a full-time job if they're working part time or a job with higher wages if they're looking for that or a first-time job."

Write to Sarah Chaney at sarah.chaney@wsj.com

(END) Dow Jones Newswires

June 18, 2018 12:38 ET (16:38 GMT)

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