WASHINGTON — Confidence in the economy revived as the Federal Reserve's bold interest-rate cut and less turmoil on Wall Street made people feel better about the country's prospects of surviving a painful credit crunch and housing slump.

The RBC Cash Index showed consumer confidence rose to 80.6 in early October. That was an improvement from September's reading of 71.1, the lowest in nearly 1 1/2 years. The index is based on the results of the international polling firm Ipsos.

"Consumers are cautiously more optimistic than a month ago," said Peter Morici, an economist and business professor at the University of Maryland. "There is a growing sense that the credit crisis is resolving. It is not wholly resolved, but it is resolving."

To help stem the crisis and stave off a recession, the Fed lowered a key interest rate for the first time in four years. It sliced the rate by one-half of a percentage point to 4.75 percent. The Fed hopes this will induce individuals and companies to spend and invest more, developments that would energize overall economic activity.

The Fed's rate cut, ordered on Sept. 18, was credited with helping to boost consumers' spirits in early October. The rate reduction came after information was collected for September's confidence reading.

Even with the Fed's action, the financial climate remains delicate. Fears persist that the sour housing market and credit problems could throw the economy into a recession. Former Federal Reserve Chairman Alan Greenspan has said the odds of a recession have grown since the spring.