The pullback in rate-cut expectations was due in large part to surprisingly strong economic data releases in October. A robust 223,000 jobs were added in September. While hiring slowed dramatically in October, this was largely due to temporary factors: two major hurricanes and a strike at Boeing. Despite the slowdown in hiring in October, the labor market remains in healthy territory and the unemployment rate stayed stable at 4.1 percent.

This solid job market contributed to a notable rise in consumer confidence at month-end. As shown in Figure 1, the Conference Board Consumer Confidence index rose to a nine-month high in October. This better-than-expected result was due to improving consumer views on both current economic conditions and future expectations. Encouragingly, the future expectations subindex rose to a nearly three-year high in October. Historically, higher levels of consumer confidence have supported faster consumer spending growth, so this was a good sign for the health of the overall economy.

Speaking of consumer spending, the updates in October showed signs of continued spending growth. September’s retail sales and personal spending reports both showed better-than-expected growth during the month. This now marks 18 consecutive months with increasing personal spending. Given that consumer spending accounts for the majority of economic activity in the U.S., its continued resilience is another encouraging signal that the economy remains on solid footing as we head to the end of the year.

The Takeaway

• The economic data releases in October showed signs of surprisingly strong economic growth.
• The labor market remains healthy despite the slowdown in hiring in October.
• Consumer spending growth came in above economist estimates for the month.