Dive Brief:
- Consumer optimism in the strength of the economy six months in the future hit the highest level since July 2021, with expectations for personal finances rising 6%, according to a November survey by the University of Michigan released Friday.
- Consumer sentiment increased 3.5% to the highest reading in six months, and expectations for short-run business conditions jumped 9%, according to Joanne Hsu, director of the university’s consumer survey. Survey interviews concluded the day before the Nov. 5 general election.
- “The expectations index surged across all dimensions,” Hsu said in a statement. Optimism for “long-run business conditions increased to its most favorable reading in nearly four years,” Hsu said in a statement, adding that overall sentiment has soared nearly 50% above its pandemic-period low in June 2022.
Dive Insight:
Consumer expectations for personal finances and the economy have improved amid indications that many Americans believe their financial well-being has declined so far this decade.
Nearly half of voters (46%) in the general election said their family’s financial circumstances had declined since the 2020 presidential election, Edison Research found in a Nov. 5 exit poll, according to Reuters.
Also, 32% of voters said the economy mattered most when deciding how to vote in the election on Tuesday, according to Edison Research.
Voters went to the polls just days after the Labor Department reported that the economy added only 12,000 jobs in October. A strike at Boeing and two major hurricanes in the Southeast subtracted from payrolls last month.
Yet other recent economic data have been brighter, with retail sales and the broader economy showing signs of unexpected vitality in recent weeks.
Retail sales rose a higher-than-expected 0.4% in September after a 0.1% gain in August, according to the Commerce Department, highlighting the strength of the consumer and bolstering recent upgrades in forecasts for 2024 economic growth.
Also, the economy will likely expand during the fourth quarter at a 2.5% annual rate, according to a forecast by the Atlanta Fed released Thursday.
Gross domestic product grew at annual rates of 1.4% in the first quarter, 3% in Q2 and 2.8% in Q3, according to the Bureau Economic Analysis.
“The latest economic data have been strong and that’s, of course, a great thing and highly welcomed,” Federal Reserve Chair Jerome Powell said Thursday at a press conference following a two-day monetary policy meeting.
“It’s actually remarkable how well the U.S. economy has been performing, with strong growth, a strong labor market and inflation coming down,” he said.
The mood among consumers improved in October more than any month since March 2021, the Conference Board said in an Oct. 29 report on its Consumer Confidence Index.
All five components of the index improved, including consumers’ assessments of current business conditions, the availability of jobs, future business conditions, future income and the future availability of jobs, the Conference Board said.
