Consumer sentiment lifted for the third consecutive month, inching up to its highest reading since April 2024, according to the University of Michigan’s Survey of Consumers.

Sentiment is now more than 40% above the June 2022 trough.

This month’s increase was primarily due to modest improvements in buying conditions for durables, in part due to easing interest rates. The upcoming election looms large over consumer expectations, said U-M economist Joanne Hsu, director of the surveys.

Overall, the share of consumers expecting a Harris presidency fell from 63% last month to 57% in October. Sentiment of Republicans, who believe that a Trump presidency would be better for the economy, rose 8% on growing confidence that their preferred candidate would be the next president.

In contrast, sentiment declined 1% for Democrats. As usual, Independents remain in between, with a 4% sentiment gain this month.

“All year, consumers have repeatedly told us that the trajectory of the economy hinges on who becomes the next president,” Hsu said. “Given the close nature of the presidential race, many consumers will be updating their expectations of the economy after the election is resolved, and sentiment may be somewhat unstable in the months ahead as consumers form their views on what the next presidency will look like.”

Labor market expectations improve, but high prices continue to weigh on consumers

Consumers’ views of labor markets became more favorable in October, Hsu said. Unemployment expectations improved slightly from last month and sit near its historical average.

Consumers’ expectations of income growth rose this month. That said, most consumers expect inflation to exceed income gains in the year ahead. This suggests that the fact that high prices remain the number one factor for the current state of their personal finances—spontaneously mentioned by 43% of consumers—will likely persist for some time.

Consumers take note of interest rate declines

Consumers welcomed the recent easing in interest rates, Hsu said. The share of consumers spontaneously mentioning the negative effect of high interest rates or tight credit on buying conditions for large purchases fell this month.

Consumer concerns over high interest rates for durable goods reached their lowest levels in two years, which will likely provide some support for consumers’ willingness to make these purchases in the months ahead.

For homebuying conditions, concerns over high interest rates fell to its lowest reading in 15 months. However, even after this recent decline, a majority of consumers still believe that high interest rates are weighing down homebuying conditions.

Consumer Sentiment Index

The Consumer Sentiment Index rose to 70.5 in the October 2024 survey, up from 70.1 in September and above last October’s 63.8. The Current Index rose to 64.9, up from 63.3 in September and below last October’s 70.6. The Expectations Index fell to 74.1, down from 74.4 in September and above last October’s 59.3.

About the surveys

The Surveys of Consumers is a rotating panel survey at the University of Michigan Institute for Social Research. It is based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by web. The minimum monthly change required for significance at the 95% level in the Sentiment Index is 4.8 points; for the Current and Expectations Index, the minimum is 6 points.