Surveys

Consumer Confidence Rises in May Despite Anxiety About the Future

SurveysJun 10, 2024

Consumer Confidence Rises in May Despite Anxiety About the Future

Expectations of a recession rose for the second consecutive month.

Woman shopping
The Conference Board’s consumer confidence index rose in May after three consecutive months of decline.
New York—U.S. consumer confidence rose in May following three consecutive months of decline, but anxiety about the future lingers.

The Conference Board’s consumer confidence index rose to 102 in May from 97.5 in April.

“According to May’s write-in responses, consumers cited prices, especially for food and groceries, as having the greatest impact on their view of the U.S. economy,” said Dana M. Peterson, chief economist at The Conference Board.

“Compared to last month, confidence improved among consumers of all age groups,” she said.

Those making more than $100,000 saw the largest rise in confidence.

On a six-month moving average basis, confidence continued to be highest among the youngest and wealthiest consumers, it found, including those under 35 and those making more than $100,000.

The average 12-month inflation expectations rose slightly to 5.4 percent from 5.3 percent.

“Perhaps as a consequence, the share of consumers expecting higher interest rates over the year ahead also rose, from 55 percent to 56 percent,” said the Conference Board.

The Present Situation Index, which measures consumers’ current view of business and labor market conditions, rose to 143.1 in May from 140.6 in April.

Consumers’ view of current business conditions was less optimistic in May, with the percentage of respondents who said current business conditions are “good” down to 20 percent from 21 percent in April, while those who said conditions are “bad” was unchanged at 18 percent.

Consumers’ view of the labor market was mixed, with those who said jobs were “plentiful” flat while those who said jobs were “hard to get” fell to 14 percent from 16 percent.

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The Expectations Index, which measures consumers’ outlook for income, business, and labor market conditions in the near future, rose to 74.6 from 68.8 in April.

Notably, an Expectations Index reading below 80 often signals a recession ahead, said the Conference Board. It has been below 80 for four consecutive months.

Consumers’ view of short-term business conditions outlook was also mixed in May.

The percentage of respondents who expect business conditions to improve was flat at 13 percent while those who expect business conditions to worsen was down to 17 percent from 19 percent.

Consumers’ assessment of the short-term labor market outlook in May was more positive.

The percentage of respondents who expect more jobs to be available was up to 13 percent from 12 percent, while the number of respondents who expect fewer jobs to be available was down to 18 percent from 20 percent.

Consumers’ assessment of their short-term income prospects was also mixed.

The number of respondents who expect their incomes to increase was flat at 17 percent, while 11 percent of respondents expect their incomes to decrease, down from 14 percent.

Consumers were also less optimistic about their family’s financial situation, both currently and over the next six months, a measure not included when calculating the Present Situation and Expectations Index.

The “Consumers’ Perceived Likelihood of a U.S. Recession Over the Next 12 Months” rose for the second consecutive month.

“The survey also revealed a possible resurgence in recession concerns,” said Peterson, with more consumers believing recession is “somewhat likely” or “very likely.”

This finding contrasts with the CEO assessments of recession risk found in its CEO Confidence survey, which reported only 35 percent of CEOs surveyed in April anticipated a recession within the next 12 to 18 months. 

Consumers were optimistic about the stock market, however, with 48 percent expecting stock prices to increase over the year ahead, 25 percent expecting a decrease, and 26 percent expecting no change.

Regarding big-ticket items, purchasing plans were mixed among respondents.

On a six-month moving average basis, purchasing plans for homes were unchanged in May at their lowest level since August 2012.

Plans to buy autos, though still “relatively depressed,” were up slightly for the second month, plans for most big-ticket appliances increased for the first time in several months. 

Lenore Fedowis the associate editor, news at National Jeweler, covering the retail beat and the business side of jewelry.
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