May Consumer Confidence Virtually Unchanged Since April

Americans feel a lot better about their current situation and less excited about the future. However, global consumer confidence indexes soared higher.

BOSTON – The Conference Board Consumer Confidence Index held steady in May (at 117.2) following a gain in April (at 117.5). However, the two index components – current situations and future expectations – moved in different directions.

The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – increased from 131.9 to 144.3. But the Expectations Index – based on consumers’ short-term future outlook for income, business and labor market conditions – fell to 99.1 in May, down from 107.9 last month.

“After rebounding sharply in recent months, U.S. consumer confidence was essentially unchanged in May,” says Lynn Franco, senior director of economic indicators at The Conference Board. “Consumers’ assessment of present-day conditions improved, suggesting economic growth remains robust in (the second quarter). However, consumers’ short-term optimism retreated, prompted by expectations of decelerating growth and softening labor market conditions in the months ahead.”

Franco also speculates that that drop in future expectations might be due to consumers being “less upbeat this month about their income prospects – a reflection, perhaps, of both rising inflation expectations and a waning of further government support until expanded Child Tax Credit payments begin reaching parents in July.”

Still, Franco says consumers “remain optimistic, and confidence should remain resilient in the short term, as vaccination rates climb, COVID-19 cases decline further, and the economy fully reopens.”

In other consumer confidence studies conducted around the world, however, the latest indicators moved notably higher, between eight and 11 points. Globally, the tally of all consumer confidence indexes rose 10 points:

U.S. current conditions: Consumers’ appraisal of current conditions improved in May. The percentage of consumers claiming business conditions are “good” fell from 19.4% to 18.7%, though the proportion claiming business conditions are “bad” also declined, from 24.5% to 21.8%.

Consumers’ assessment of the labor market notably improved. The percentage saying jobs are “plentiful” climbed from 36.3% to 46.8%, while those claiming jobs are “hard to get” declined from 14.7% to 12.2%.

U.S. future conditions: The percentage of consumers expecting business conditions to improve over the next six months fell from 33.1% to 30.3%, while the proportion expecting business conditions to worsen rose from 12.1% to 14.8%.

Consumers were also less upbeat about the job market. The proportion expecting more jobs in the months ahead fell from 31.7% to 27.2%, while those anticipating fewer jobs rose from 14.4% last month to 17.3% in May.

Regarding short-term income prospects, 14.5% of consumers expect their incomes to increase in the next six months, down from 17.4% in April. The proportion expecting their incomes to decrease also fell, from 10.5% in April to 9.3% in May.

The monthly survey, based on an online sample, is conducted by Toluna for The Conference Board. The cutoff date for the preliminary results was May 19.

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