Consumer confidence on the rise, but expectations still iffy

WASHINGTON – After taking a stark hit in April, the Consumer Confidence Index from The Conference Board rose in May, up to 102.0 from a slightly revised 97.5. However, the Expectations Index stayed below the recession-indicating mark for the fourth straight month.

The Expectations Index – based on consumers’ short-term outlook on income, business and labor market conditions – technically increased to 74.6 from 68.8, but it still falls below 80, the threshold that typically signals a recession is ahead.

“Confidence improved in May after three consecutive months of decline,” said Dana M. Peterson, chief economist at The Conference Board. “Looking ahead, fewer consumers expected deterioration in future business conditions, job availability and income, resulting in an increase in the Expectation Index. Nonetheless, the overall confidence gauge remained within the relatively narrow range it has been hovering in for more than two years.”

In addition, the Present Situation Index – based on consumers’ assessment of current business and labor market conditions – also saw a slight increase. The Present Situation Index rose to 143.1, up from 140.6 reported in April.

“The strong labor market continued to bolster consumers’ overall assessment of the present situation,” Peterson said. “Views of current labor market conditions improved in May, as fewer respondents said jobs were ‘hard to get,’ which outweighed a slight decline in the number who said jobs were ‘plentiful.’”

What follows is a deeper look at this month’s report and its key figures:

Present situation

Consumers’ assessment of current business conditions was slightly less positive in May.

  • 20.3% of consumers said business conditions were “good,” down from 20.8% in April.
  • 17.6% said business conditions were “bad,” unchanged from last month.

Consumers’ appraisal of the labor market improved – on balance – in May.

  • 37.5% of consumers said jobs were “plentiful,” down from 38.4% in April.
  • Just 13.5% of consumers said jobs were “hard to get,” down from 15.5%.

Expectations in 6 months          

Consumers were less pessimistic about the short-term business conditions outlook in May.

  • 13.3% of consumers expected business conditions to improve, down from 13.4% in April.
  • 16.8% expected business conditions to worsen, down from 19.1%.

Consumers’ assessment of the short-term labor market outlook was also less negative in May.

  • 12.6% of consumers expected more jobs to be available, up from 12.3% in April.
  • 18.2% anticipated fewer jobs, down from 19.8% last month.

Consumers’ assessment of their short-term income prospects improved in May.

  • 16.9% of consumers expected their incomes to increase, up from 16.8% in April.
  • 11% expected their incomes to decrease, down from 14%.

See also:

  • Consumer Confidence Index hits 2-year low; consumers struggle with surging prices
  • Just how long is the path to purchase for furniture shoppers?
  • Retailers hope for first half flourish during Memorial Day sales

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