The Conference Board consumer confidence index decreased slightly in May, after a small increase in April. The index now stands at 106.4, down from 108.6 in April ( after an upward revision). While the expectations index, based on consumers’ short-term perspectives on income, business and labor market conditions, decreased to 77. 5 from 79.0.
“Consumer confidence fell slightly in May, after rising modestly in April”, said Lynn Franco, senior director of economic indicators at The Conference Board. “The decline in the Current Situation Index was driven solely by a perceived weakening in labor market conditions.”
On the contrary, Franco explained, views on current business conditions improved, which tend to run ahead of trends in jobs, and the Current Situation Index remained strong overall, suggesting that growth did not contract further in the second quarter.
With the expectations index weakening even more, consumers also do not expect the economy to recover in the coming months.
“Meanwhile, purchase intentions for cars, homes, major appliances and more cooled, likely as a reflection of rising interest rates and consumers shifting from items expensive to spend on services. Vacation plans have also softened due to rising prices,” said the senior director of The Conference Board. “Indeed, inflation remains a top priority for consumers, with their May inflation expectations largely unchanged from April’s elevated levels. Looking ahead, rising prices and additional interest rate increases are expected to pose continued downside risks to consumer spending this year.”
Valuation of consumers on current business conditions improved in May, compared to the previous report:
– On 21.1% of consumers said that business conditions were “good”, compared to 20.8% prior.
– On 20.7% of consumers said that the commercial conditions were “bad”, compared to 22.2%.
Consumers’ evaluation of the labor market was less positive:
– The 24.8% of consumers said jobs were “plentiful”, in front of the 54.8%.
– The 12.5% of consumers said jobs are “difficult to obtain”, compared to 12.1%.
Expectations in six months:
– Consumer pessimism about the outlook for short-term business conditions increased in May.
– The 14.7% of consumers expect business conditions to improve, compared to 18.6 % prior.
– The 24.9% expect that the commercial conditions worsen, compared to 21.7%.
Consumers were mixed about their short-term financial prospects, compared to the previous report:
– 19% of consumers expect their income to increase, compared to 17.8%.
-On the contrary, the 14.5% expect their income to decrease, compared to 13.2%.
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