Despite federal budget cutbacks and people getting hit with Social Security taxes returning to normal, consumers feel better about the American economy than they have in five years.

The private research group, The Conference Board, and its latest Consumer Confidence Index shows consumer sentiment improved again this month after moving higher in April. The 76.2 rating is the highest since February 2008, up significantly from April’s reading of 69.

This a sharp turnaround from March, when consumer confidence plummeted following automatic federal budget cutbacks known as the “sequester.”

“Consumers’ assessment of current business and labor-market conditions was more positive and they were considerably more upbeat about future economic and job prospects,” says Lynn Franco, director of economic indicators at The Conference Board. “Back-to-back monthly gains suggest that consumer confidence is on the mend and may be regaining the traction it lost due to the fiscal cliff, payroll-tax hike, and sequester.”

Consumers’ appraisal of present-day conditions improved in May, with those describing business conditions as “good” increasing to 18.8% from 17.5%, while those stating business conditions are “bad” decreased to 26% from 27.6%. Consumers’ assessment of the labor market was also more positive with those claiming jobs are “plentiful” increasing to 10.8% from 9.7%, while those claiming jobs are “hard to get” edged down to 36.1% from 36.9%.

Consumers expecting business conditions to improve over the next six months increased to 19.2% from 17.2%. Those expecting business conditions to worsen decreased to 12.1% from 14.8%.

The news follows a federal report late last week showing claims for first-time unemployment benefits fell from the prior week and was lower than many economists were expecting, raising hopes that job creation In May will be higher than the increase seen in April.