The feature measuring current attitudes dropped slightly, but Americans’ future expectations lowered in the face of inflation and interest rates.
BOSTON – The Conference Board Consumer Confidence Index decreased slightly in May, on the heels of a small increase in April. The Index now stands at 106.4, down from 108.6 in April (after an upward revision).
The Present Situation Index – consumers’ assessment of current business and labor market conditions – declined to 149.6 from 152.9 last month. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – declined to 77.5 from 79.0.
“The decline in the Present Situation Index was driven solely by a perceived softening in labor market conditions,” says Lynn Franco, senior director of economic indicators at The Conference Board.” By contrast, views of current business conditions – which tend to move ahead of trends in jobs – improved. Overall, the Present Situation Index remains at strong levels, suggesting growth did not contract further in Q2.”
Present situation
- 21.1% of consumers said business conditions were “good,” up from 20.8%
- 20.7% said business conditions were “bad,” down from 22.2%
Consumers’ assessment of the labor market was less positive:
- 51.8% said jobs were “plentiful,” down from 54.8%
- 12.5% said jobs are “hard to get,” up from 10.1%
Franco says the Expectations Index suggests further weakening. “Consumers also do not foresee the economy picking up steam in the months ahead. They do expect labor market conditions to remain relatively strong, which should continue to support confidence in the short run.”
Expectations six months in the future
- 17.7% of consumers expect business conditions to improve, down from 18.6%
- 24.9% expect business conditions to worsen, up from 21.7%
Consumers were somewhat less pessimistic about the short-term labor market outlook:
- 18.5% expect more jobs to become available, virtually unchanged from 18.4%
- 18.7% anticipate fewer jobs, down from 19.8%
Consumers were mixed about their short-term financial prospects:
- 19.0% o expect their incomes to increase, up from 17.8%
- Conversely, 14.5% expect incomes will decrease, up from 13.2%
“Purchasing intentions for cars, homes, major appliances and more all cooled – likely a reflection of rising interest rates and consumers pivoting from big-ticket items to spending on services,” says Franco. “Vacation plans have also softened due to rising prices. Indeed, inflation remains top of mind for consumers, with their inflation expectations in May virtually unchanged from April’s elevated levels. Looking ahead, expect surging prices and additional interest rate hikes to pose continued downside risks to consumer spending this year.”
Toluna conducts the monthly Consumer Confidence Survey for The Conference Board. The cutoff date for the preliminary results was May 23.
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