Consumer sentiment rose in October to its highest level in more than three years, spurred by high economic hopes and improved job prospects.
The Thomson Reuters/University of Michigan Index of Consumer Sentiment climbed to 86.9 in its final October reading, up from 84.6 in September and 73.2 last year. October's index was the highest since July 2007, the group conducting the survey reported.
All of this month's gain was concentrated in the survey's Expectations Index, which rose to 79.6 from 75.4 in September. The Current Conditions Index, meanwhile, slipped to 98.3 from 98.9.
Nearly 60 percent of consumers surveyed this month reported that the economy had recently improved in their view, the most positive rating in more than a decade, the group reported. Asked about their economic outlook for the year ahead, 45 percent said they expect "good times financially," the highest level since July 2007.
Consumers also anticipated that ongoing economic strength will lead to further declines in the national unemployment rate, which fell below the 6 percent mark in its most recent reading for the first time since 2008.
"[C]onsumers reported the most favorable personal financial expectations as well as the most positive year-ahead outlook for the national economy in the past seven years," Surveys of Consumers said in its report. "What the survey did not find was any negative impact on confidence from the global economic slowdown, military conflicts, or Ebola."
Income expectations were also optimistic. In both the September and October surveys, more households expected income gains than any time since September 2008. The median increase was 1.1 percent, also the highest since late 2008.
"Consumers have been gradually regaining their economic footing in the past several months, with confidence rising to the highest level since the start of the Great Recession," said Richard Curtin, the survey's chief economist. "This is not the first time such a strong rebound has occurred, but this time it appears to have more forward traction. ... Finally, five years after the start of the recovery, consumers have begun to adopt the expectations and behaviors that have driven past expansions."
The UMich survey isn't the only confidence measure to improve this month. The Conference Board's Consumer Confidence Index, also released this week, surged to 94.5 in October following a drop in September.
"A more favorable assessment of the current job market and business conditions contributed to the improvement in consumers' view of the present situation," said Lynn Franco, director of economic indicators at the Conference Board. "Looking ahead, consumers have regained confidence in the short-term outlook for the economy and labor market, and are more optimistic about their future earnings potential."