Three Conference Board indexes fell in May, reflecting consumers’ ongoing uneasiness about the economy.
The board’s Consumer Confidence Index fell in May to 102.3 (1985=100), down from an upwardly revised 103.7 in April. In addition, the Present Situation Index—based on consumers’ assessment of current business and labor market conditions—decreased to 148.6 (1985=100) from 151.8 the previous month.
And the Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—decreased slightly to 71.5 (1985=100) from 71.7. The Expectations Index has now remained below 80—the level associated with a recession within the next year—every month since February 2022, with the exception of a brief uptick in December 2022.
“Consumer confidence declined in May as consumers’ view of current conditions became somewhat less upbeat while their expectations remained gloomy,” said Ataman Ozyildirim, Senior Director, 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 from 47.5 percent in April to 43.5 percent in May.”
Consumers also became more downbeat about future business conditions, as reflected in the expectations index. However, expectations for jobs and incomes over the next six months held relatively steady.
Rising prices also remain a major worry for shoppers. “Consumers’ inflation expectations remain elevated, but stable. Consumers in May expected inflation to average 6.1 percent over the next 12 months—essentially unchanged from 6.2 percent in April, though down substantially from the peak of 7.9 percent reached last year,” Ozyildirim said.
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Nonetheless, consumers continued to view inflation as a major influence on their spending plans. While intentions to purchase homes in the next six months held steady in May at around 5.6 percent, that was still down from 6 to 7 percent in the fourth quarter of 2022. Meanwhile, plans to purchase autos and big-ticket appliances ticked up somewhat compared to April.
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