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Consumer confidence has stormed into territory normally associated with an economic boom as the fastest jump in confidence on record has turned even the most sceptical into optimists.

The Westpac-Melbourne Institute confidence index soared 28 per cent in three months to August, a far bigger jump than the 23 per cent recorded as Australia climbed out of the early 1980s recession and the 20 per cent recorded as Australia climbed from the 1990s recession.

Significantly, optimists now outnumber or equal pessimists in every age group, every income range, every occupation type, and for the first time in almost two years, every political persuasion.

"I am amazed," said the Melbourne Institute's Professor Guay Lim, who compiled the survey. "We asked the questions this weekend after a week of very good news on employment and the Reserve Bank's positive assessment of the economy. People seem to have come around to the view that the worst won't happen to them."

Coalition voters have been consistently negative in their views about the economy since just after the election of the Rudd Government in November 2007. This month they jumped into positive territory for the first time since early 2008 with optimists outweighing pessimists by 12 percentage points.

Labor voters have been in positive territory for three months with optimists outweighing pessimists by 20 points.

The Treasurer, Wayne Swan, described the turnaround in confidence as "staggering" and raised the prospect of it becoming self-fulfilling.

"Ultimately it is the confidence of Australian consumers and businesses that will provide the spark for sustained economic recovery," he told parliament, adding that retail spending was up 5 per cent on November and the construction of new homes up 55 per cent on October.

The detail of the figures suggests that the retail boom will continue even after the Government's stimulus payments have been spent. The number of people who agreed with the proposition that "now is a good time to buy a major household item" outnumbered those who did not by an extraordinary 2 to 1.

There were also big increases in the proportion of people who agreed that "now is a good time to buy a dwelling" and that "now is a good time to buy a car", with both well above long-run averages.

"This will encourage the Reserve Bank to begin the process of normalising interest rates, probably from early 2010," said an economist at Westpac, Matthew Hassan. "As far as consumers are concerned, the worst appears to have passed."

Notably, Mr Swan did not make his usual reference to Australia not being "out of the woods". Instead, he spoke of "good news and bad news before this crisis is behind us," suggesting that the Government's own views may be becoming more optimistic.