A measure of consumer confidence rose in late October to a new pandemic high, largely reflecting growing optimism among Democrats that Joe Biden will win the presidential election.
The final reading of consumer sentiment index edged up to 81.8 in October from an initial 81.2, the University of Michigan said Friday.
The increase occurred despite a surge in coronavirus cases toward the end of the month, as Americans turned their attention to the presidential election on Tuesday.
What happened: Rising optimism was mostly felt by Democrats. Some 53% of the people surveyed thought Biden would defeat Donald Trump while 42% expected the president to win reelection.
Optimism among Democrats about their own finances also rose sharply, and for the first time in near four years, it nearly matched the expectations of Republicans.
In 2016, it should be pointed out, two-thirds of survey respondents in the final sentiment poll before the election expected Hillary Clinton to defeat Trump, who scored a surprise upset.
An index that measures current conditions, meanwhile, rose to 85.9 from 84.9 earlier in the month, though it was still below September’s level. The rise in coronavirus cases and slower pace of hiring put Americans more on edge.
Consumers still think the situation will improve by early next year, particularly Democrats. An index that measures expectations for the next six months rose to 79.2 in late October from 78.5 earlier in the month and 75.6 in September.
Big picture: The outcome of the presidential election in 2020, just like in 2016, is sure to exacerbate a partisan divide over how Americans view the economy. But it’s the course of the coronavirus and the search for a cure that will be the ultimate determinant of how quickly the U.S. recovers.
The latest and record outbreak of cases threatens to retard the recovery after a strong rebound in the third quarter.
What they are saying? “The impact of the covid virus and the extremes of hyper-partisanship will continue long past next week’s election, with the potential to permanently alter the economic and political landscape ,” noted Richard Curtin, the chief economist at the group that produces the sentiment survey.
Market reaction: The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.50% and S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.48% fell again in Friday trades. Stocks declined the past two days on worries about a rising number of coronavirus cases around the world.