The U.S. consumer confidence rebounded, achieving its largest gain since March 2021, as labor market conditions improved, according to data released by the Conference Board on October 29.

The Consumer Confidence Index rose to 108.7 in October, marking an increase of 9.7 points from the previous month and achieving its largest gain since March 2021, though it remains below pre-pandemic levels. The Present Situation Index rose 14.2 points to 138, while the Expectations Index climbed 6.3 points to 89.1, reaching its highest level since December 2021.

Dana M. Peterson, Chief Economist at the Conference Board, stated that consumers are optimistic about current business conditions and have shown renewed confidence in the labor market after several months of weakness.

The report indicates that the percentage of consumers who see job opportunities as plentiful increased by 3.8 percentage points to 35.1%, while those who find jobs hard to get declined to 16.8%, widening the gap for the first time since January.

Consumers also expressed greater optimism regarding future business activity and personal financial prospects. The survey indicates that expectations of an economic downturn over the next 12 months are at their lowest level since July 2022, while plans to purchase durable goods, such as homes and automobiles, continue to increase.

Interestingly, interest in the upcoming election appears to be lower than in previous years. Election-related keywords ranked first and second in 2016 and 2020, but for 2024, they fell to fifth, with inflation and price-related keywords now taking precedence.

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• Confidence Rebounded in October as Consumers Regained Faith in the US Economy

The U.S. Consumer Confidence Index for September dropped sharply to 98.7 from 105.6 in the previous month, a decline of 6.5%, marking the largest decline since August 2021, according to data released by the U.S. Conference Board on September 24.

According to the report, the decline primarily reflects concerns among consumers regarding the outlook for the U.S. labor market. The percentage of consumers who believe jobs are currently hard to get increased to 18.3% (from 16.8%), while those expecting fewer job in the future rose to 18.3% (from 17%).

Despite the unemployment rate remaining at historic lows and layoffs being relatively limited, the proportion of consumers who think the economy has already entered a recession increased slightly compared to the previous month.

Inflation remains a critical factor influencing consumer confidence. Although inflation is steadily returning to the Federal Reserve’s target range, the report indicated that consumers’ inflation expectations for the next 12 months rose to 5.2% (from 5.0%). However, the percentage of consumers expecting inflation to decrease saw a slight increase.

Additionally, after the stock market’s volatility in August, the proportion of consumers expecting stock prices to fall over the next year declined to 25% (from 26.7%).

On the family’s financial situation, the survey revealed that consumer purchasing plans have shown a divided trend. There has been a slowdown in plans to purchase electronics, particularly smartphones and laptops/desktops. However, purchasing plans for homes and new vehicles have improved slightly, likely reflecting the Federal Reserve’s recent rate cuts.

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The U.S. Consumer Confidence Index slightly increased in August, reaching 103.3, as reported by the Conference Board on August 27.  This marks a small rise of 1.4 from the previous month.

Both the Present Situation Index and the Expectations Index improved in August, indicating that consumers remain optimistic for business activity. However, recent increases in the unemployment rate have dampened consumer optimism regarding the labor market, leading to a more pessimistic outlook for future labor conditions.

While overall consumer confidence rose, confidence among those with incomes below $25K declined, whereas those with incomes above $100K showed the highest levels of confidence. This is consistent with the findings from the University of Michigan’s July consumer sentiment survey, which highlighted that lower-income individuals feel the impact of inflation more acutely, contributing to their decreased confidence in economic prospects.

Additionally, consumer expectations for the stock market have shifted, with more people now believing that stock prices will decline over the next year, likely reflecting concerns over the recent rise in unemployment. Interestingly, consumers have not altered their expectations regarding the likelihood of a potential economic recession.

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The University of Michigan released its Consumer Sentiment Index on August 16th, showing a preliminary reading of 67.8 for August, up slightly by 1.4 points from 66.4 in the previous month. The report indicates that with Kamala Harris replacing Joe Biden as the Democratic presidential nominee, confidence among Democratic supporters rose by 6%, while confidence among Republican supporters fell by 5%.

Regarding future economic developments, 41% of consumers believe that Harris would better support economic growth, while 38% favor Trump. Before Biden’s withdrawal, Trump had a 5-point lead over Biden in terms of economic development.

Overall, the dynamics of the presidential election seem to have a certain impact on consumers’ future expectations, as their outlook for personal finances and the economy over the next five years has reached its highest level in nearly four months.

Despite the increasing focus on the U.S. election, inflation remains the most important issue for consumers. One-year inflation expectations remain at 2.9%, unchanged from the previous month, and within the pre-pandemic range of 2.3% to 3.0%. Long-term inflation expectations have also remained steady at 3.0% for the past five months, slightly above the pre-pandemic range of 2.2% to 2.6%.