The Conference Board’s Consumer Confidence Index® surged to 108.7 (1985 = 100) in October, up from a revised figure of 99.2 in the prior month. The jump is the biggest monthly increase in over three years and was largely driven by broad-based improvements across demographics. Consumers aged 35-54 and high-income households were particularly optimistic. The Present Situation Index, which reflects consumers’ sentiment toward current business conditions and the labor market, jumped 14.2 points from the previous month to 138.0. Consumers saying current business conditions were good increased to 21.4% from a downwardly revised 18.6%. The Expectations Index, which reflects consumers’ expectations for income, business, and labor market conditions over the next six months, increased to 89.1 from an upwardly revised 82.8. A reading below 80 can suggest a recession in the near future. Consumers expecting business conditions to improve increased to 21.0% from 19.4%.

The Commerce Department’s first estimate on the third-quarter gross domestic product (GDP) growth reported the economy expanded at an annual rate of (+2.8%), down from the previous quarter’s (+3.0%) growth rate, but up from (+2.5%) for all of 2023. Consumer spending as measured by personal consumption expenditures was the primary contributor, increasing (+3.7%) for the quarter. Consumer spending was responsible for 2.46 percentage points (pp) of the total GDP increase. The increase in PCE was driven by spending on goods (+6.0%), which added 1.25 pp to the GDP, while spending on services increased (+2.6%), adding 1.21 pp. Government spending at the federal level rose (+9.7%), adding 0.85 pp, while exports increased (+8.9%), adding 0.60 pp. Core prices for personal consumption expenditures, which exclude food and energy, a preferred measure of inflation by the Fed, rose (+2.2%) as compared to a (+2.8%) increase in Q2 and (+4.1%) for all of 2023.

The U.S. Bureau of Labor Statistics reported an increase of just 12,000 jobs in October, as the unemployment rate was unchanged at 4.1%. The number of unemployed increased (+150,000) to 6.9 million. A year earlier, the unemployment rate was 3.8%, and the number of unemployed was 6.4 million. Health care (+52,000) and government (+40,000) saw job increases, but temporary help services (-49,000) had a decrease. Additionally, strike activity resulted in a (-46,000) drop in manufacturing jobs. There were 1.835 million permanent job losses among the unemployed, a rise of +153,000. After three consecutive months at 62.7%, the labor force participation rate decreased to 62.6%. Average hourly earnings grew 0.4%. At $35.46, average hourly earnings are up 4.0% from a year ago. Revisions to the August and September figures showed that 112,000 fewer jobs were added than were initially reported.