U.S. Consumer Confidence Slips a Bit in May

The Conference Board say inflation continues to drag down attitudes about the economy. However, job and income expectations through Oct. remain positive.

BOSTON – The Conference Board Consumer Confidence Index in May eased down to 102.3, down from April’s upwardly revised 103.7.

The Present Situation Index – consumers’ assessment of current business and labor market conditions – decreased to 148.6 from 151.8 last month. The Expectations Index – consumers’ short-term outlook for income, business and labor market conditions – decreased slightly to 71.5 from 71.7.

The Expectations Index has now remained below 80 since February 2022 – a level often associated with a recession in the not-so-distant future – though it did rise a bit in one of those months, December 2022.

“Consumer confidence declined in May as consumers’ view of current conditions became somewhat less upbeat, while their expectations remained gloomy,” says Ataman Ozyildirim, senior director of economics at The Conference Board.

“Their assessment of current employment conditions saw the most significant deterioration, with the proportion of consumers reporting jobs are ‘plentiful’ falling 4 percentage points from 47.5% in April to 43.5% in May. Consumers also became more downbeat about future business conditions, weighing on the expectations index.”

“However, expectations for jobs and incomes over the next six months held relatively steady,” Ozyildirim adds, noting that the expectation drop was most noticeable among over 55 years of age.

“Consumers in May expected inflation to average 6.1% over the next 12 months – essentially unchanged from 6.2% in April, though down substantially from the peak of 7.9% reached last year,” he says. “Nonetheless, consumers continued to view inflation as a major influence on their view of the U.S. economy.”

When asked about buying within the next six months, the Conference Board found little change in May, with the percentage holding steady at 5.6% of those surveyed. Still, that’s down from 6 to 7% in Q4 2022. However, plans to purchase autos and big-ticket appliances ticked up somewhat compared to April.”

Present situation

Consumers’ assessment of current business conditions improved marginally in May:

  • 19.6% of consumers said business conditions were “good,” up from 19.0% last month.
  • 17.0% said business conditions were “bad,” down from 18.1%.

Consumers’ appraisal of the labor market deteriorated:

  • 43.5% said jobs were “plentiful,” down from 47.5%.
  • 12.5% said jobs were “hard to get,” up from 10.6% last month.

Expectations six months hence

Consumers remained pessimistic about the short-term business conditions:

  • 12.9% expect business conditions to improve, down from 14.1%.
  • 20.6% expect business conditions to worsen, down slightly from 21.4%.

Assessments about the short-term labor market were slightly more favorable:

  • 13.6% expect more jobs to be available, down from 14.3%.
  • 20.2% anticipate fewer jobs, down from 21.3%.

Short-term income prospects were, on balance, slightly more favorable:

  • 17.8% expect their incomes to increase, up slightly from 17.3% last month.
  • 11.5% expect their incomes to decrease, the same as in April.

Toluna conducts the monthly consumer confidence survey for the Conference Board. The cutoff date for the preliminary results was May 22 before Congress and President Biden reached a final agreement on the U.S. debt ceiling.

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