U.S. Consumer Confidence Remains Flat in May – The Conference Board

Consumer confidence in the U.S. was largely unchanged in May following four straight months of gains, signaling that Americans’ optimist view of the economy is moderating amid concerns over rising prices and waning government support.

The consumer confidence index decreased to 117.2 in May from a revised 117.5 in April, according to data from The Conference Board released Tuesday. The reading misses economists consensus, who polled by The Wall Street Journal expected the indicator to come in at 118.7.

May marks the first retreat in consumer confidence since December. The indicator rose sharply in both March and April, driven by the continued reopening of the economy and a new round of stimulus checks that fuelled consumer spending. However, confidence still falls short of the 132.6 pre-pandemic high registered in February 2020.

The present situation index, which reflects consumers assessment of current business and labor market conditions, rose to 144.3 in May from 131.9 in April.

However, the expectations index, which gauges short-term outlook for income, business and labor market conditions, decreased to 99.1 in May from 107.9 the previous month.

The fall was prompted by expectations of decelerating growth and softening labor market conditions in the months ahead, said Lynn Franco, senior director of economic indicators at The Conference Board.

“Consumers were also 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,” she said.

The fall in consumers expectations casts doubts on the economic outlook, said Drew Matus, chief market strategist at MetLife Investment Management. “The decline in this index at a time when people should be more optimistic about the future raises key questions about how smooth the recovery is likely to be,” he said.

Consumer confidence stagnation in May came despite the improvement on the public health situation, with Covid-19 infections steadily decreasing to almost one-year lows.

“Falling Covid-19 case counts have allowed consumers to shift their focus away from the public health crisis and toward the underlying economy, characterized in May by weak job growth, shrinking savings and falling stock prices,” said John Leer, economist at data intelligence firm Morning Consult.

The daily consumer sentiment index compiled by the firm decreased to 99.6 on May 23 from 102.4 on May 3. Recent decreases in consumer confidence reflect consumers’ growing awareness of the financial and economic issues they are likely to face even after the economy fully reopens, Mr. Leer said.

Another consumer sentiment survey carried out by the University of Michigan showed that Americans’ mood on the economy soured in early May to the lowest level since February. The decrease was attributed to concerns about increasing inflation for the year ahead, which rose to the highest levels in a decade.
Source: Dow Jones