As Americans prepare to head to the polls next week, a surprising bright spot has emerged—consumer confidence is on the rise.
According to the Conference Board’s monthly consumer confidence index released Tuesday, optimism about the current state of the economy saw its biggest monthly gain since March 2021.
The overall index jumped to 108.7 in October, up from 99.2 in September. But most striking was the 14.2 point surge in the present situation component to 138, suggesting consumers have a much more positive view of current economic conditions.
Expectations about the future rose by over 6 points to 89.1, calming fears about a potential recession on the horizon.
“After stagnating for months, confidence finally broke free with across-the-board improvements,” said Dana Peterson, chief economist at the Conference Board. “For the first time in over a year, consumers gave a thumbs up to current business conditions. And views bounced back about jobs currently available – likely reflecting recent upbeat labor market data.”
Peterson added that consumers seem “substantially more optimistic” about future business conditions and income growth in the months ahead. They also showed some “cautious optimism” about job availability going forward–a noticeable shift from pessimism in recent months.
Gains in confidence were broad, spanning age groups and income levels. But the spike was sharpest for 35-54 year olds. Over a 6-month horizon, those earning over $100,000 annually and consumers under 35 registered the highest level of confidence.
Historically, a strong economy favors the incumbent party in an election. Following favorable economic data release, the White House issued a press release touting gains.
But this race has puzzled experts, making it hard to draw conclusions about its impact. While economic performance exceeded expectations in 2024, inflation and cost of living are leading voter concerns, according to polls.
What happens in 2025 could tell a different story. For now, the expectation is continued expansion and retreating inflation next year. More confirmation comes from Wednesday’s report form the Bureau of Economic Analysis which pegs Q3 GDP’s growth at 3%.
In other encouraging news: August’s 4.2% annual home price growth marks a cooldown from July’s 4.8% pace per the S&P CoreLogic national index. New York, Las Vegas and Chicago topped increases at 8.1%, 7.3% and 7.2%. Denver saw the smallest rise at 0.7%.
The job market also remains resilient, as highlighted in Tuesday’s JOLTs report. Openings fell by 420,000 to 7.4 million in September, down from over 9 million last year–suggesting employers are having an easier time filling roles. Moreover, ADP’s October release reported 233,000 job gains in the private sector.
As Americans prepare to hit the polls, their confidence rebound hints they are finally glimpsing light at the end of the tunnel.
However, it remains to be seen whether optimism can overcome their worries about rising costs and policy uncertainty on the eve of yet another consequential election.
