Consumer Optimism Rebounds—But Will it Last?

In the third quarter of 2024, optimism in the U.S. economy grew to its highest level in a year, increasing to 41 percent from 33 percent a quarter earlier, the latest ConsumerWise study by management consultant McKinsey finds. Nevertheless, many of the same dynamics that have characterized consumers’ feelings in the past year—including a cautiousness toward spending and a simultaneous willingness to splurge—remain evident.

“We also observe some growing gaps among demographic groups: for example, younger consumers report significantly higher optimism than older consumers, while male and female respondents in our survey report feeling differently about the economy,” the study notes.

Unsurprisingly, high-income consumers were more optimistic about the economy in the third quarter than middle- and low-income consumers. But age, not income, seems to be the main determinant of third-quarter results.

Gen Zers and millennials across income groups report higher rates of optimism compared with Gen Xers and baby boomers. This could be related to the long-term unemployment rate, since a higher percentage of Gen Xers are long-term unemployed, or unemployed for more than 27 weeks, than those in younger generations.

Another divergence among demographic groups stood out: male respondents note higher levels of optimism (47 percent) compared with female respondents (37 percent). Levels of optimism increased relative to the second quarter for both groups, and the gap between male optimism and female optimism has held steady for the past year. Male respondents report feeling optimistic about an improved job market in the third quarter, while female respondents indicate feeling concerned over making ends meet.

As for what they plan to spend on, in the most recent survey, consumers indicated they planned to increase their spending on most essential, semi-discretionary and discretionary items over the next three months. “In a few categories, including fresh produce and home improvement and gardening supplies, consumers say they plan to decrease their spending compared with the second quarter,” the report notes. “This makes sense, given that consumers are probably expecting to spend less on gardening supplies as summer winds down and fall begins.”

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