Consumer Sentiment Hits Three-Year High in October

According to Morgan Stanley’s latest AlphaWise survey, consumer sentiment in the U.S. reached a three-year high in October, tracking U.S. consumers' spending intentions.

The note from Morgan Stanley on Monday highlighted increasing optimism concerning the economy, even though plans for consumer electronics spending remain weak.

Conducted between October 24 and 28, the survey revealed a rise in consumer confidence, with more Americans expressing a positive outlook than at any point since July 2021.

> “US consumers now have the most positive view on the economy since July 2021,” the bank remarked.

The bank mentioned that high-income households noted a marked improvement in their financial outlook, while the sentiment among other income brackets remained stable.

Despite this optimism, the survey indicated a less favorable outlook for consumer electronics spending as the holiday season approaches. Short-term electronics spending intentions reportedly fell month-over-month, diverging from the typical rise seen in October ahead of Black Friday and Cyber Monday.

Specifically, net spending intentions for electronics over the next month declined to -7%, a decrease compared to previous years’ increases.

Additionally, the survey indicated that a net 5% of consumers plan to cut their electronics spending this holiday season compared to last year.

In the medium term, while spending intentions had shown some improvement—particularly among higher-income households—they are still in negative territory overall. The six-month outlook for electronics spending improved by three percentage points to -12%, reflecting an overall restrained enthusiasm for major purchases.

As the holiday season nears, the survey's findings suggest that while consumer sentiment is broadly improving, expectations for electronics purchases remain low. Morgan Stanley’s analysts advise caution for retailers in this sector, as spending intentions have not yet shown consistent positive momentum.