As the economy continues to improve, American consumers are regaining confidence both in business conditions as well as their personal finances. Recent research has found that many people are hitting stores and increasing their spending as they begin to feel better about the future. Additionally, consumer sentiment is rising, which has reached the highest levels in five years. All of these positive signs mean good news for retailers throughout the country, as shoppers are expected to visit stores in droves over the next few months in preparation for the holiday season.

September sees better-than-expected consumer spending

According to The Associated Press, the most recent report from the U.S. Commerce Department revealed that for the month of September, consumers spent at twice the rate that their incomes increased. From August, spending rose by 0.8 percent in September, following a 0.5 percent growth in the previous month. This represents a strong sign of confidence among American consumers and is also the best showing since February, states the news source.

As consumer spending activity is such a large driver of the economy, the increases in the third quarter helped to with the 2 percent rise of economic growth during the time period. This boost followed the second quarter's increases of 1.3 percent, writes the source.

October consumer sentiment reaches five-year high

ENews Park Forest reports that the recent and significant rise in spending could be due to the fact that consumer sentiment rose to its highest levels in five years, according to the Thomson Reuters/University of Michigan Survey of Consumers. The research revealed that Americans are feeling increasingly optimistic not only about their own personal finances, but also about the nation's economy and the employment outlook.

The sentiment index figure was at 82.6, up from September's figure of 78.3 and October 2011' index of 60.8. Expectations are also on the rise, with this month's figure coming in at 79. Last month's index was at 73.5, and a year ago it was 51.7.

"Overall, consumers were more confident about economic prospects in October than any other time during the past five years," said University of Michigan economist and director of the Surveys of Consumers Richard Curtin.