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Consumer confidence rebounded in October to 108.7 from 99.2 in September. October’s gain was the largest since March 2021, with all five components of the index improving.

The Present Situation Index, reflecting current business and labor market conditions, increased 14.2 points to 138.0. The Expectations Index, which reflects consumers’ short-term outlook for income, business and labor market conditions, rose 6.3 points to 89.1, well above the recession signal threshold of 80. Consumers’ assessments of current business conditions turned positive, with 21.4% of consumers saying business conditions were “good.” Views of the current labor market situation also improved from September, with a higher share of consumers saying jobs were “plentiful.” Consumers also felt more optimistic about future labor market conditions for the first time since July 2023, with more consumers anticipating more jobs to be available than less. In addition, consumers felt more positive about future business conditions and future income prospects. Meanwhile, consumers’ views of their current financial situation were essentially unchanged from the prior month.

Despite slower overall price increases, inflation expectations ticked up to 5.3% in October, and expectations for higher interest rates rose. Consumers welcomed the recent reduction in interest rates but felt the rate level was still too high. Buying plans for homes and new cars continued to rise, while purchase plans for big-ticket appliances were mixed. While response were largely positive about economic conditions, concerns about a recession dropped to a new low in October.