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Consumer Confidence Slipped in May

Consumer Confidence Slipped in May

June 1, 2023
Consumers are more downbeat about future business conditions, says the Conference Board.

Consumers are feeling a bit shaky these days. Confidence, as measured by the  Conference Board Consumer Confidence Index fell in May to 102.3 (1985=100), down from an upwardly revised 103.7 in April.

“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, said in a statement on May 31. “Their assessment of current employment conditions saw the most significant deterioration, with the proportion of consumers reporting jobs are ‘plentiful’ falling 4 ppts from 47.5% in April to 43.5% in May.

"Consumers also became more downbeat about future business conditions, weighing on the expectations index. However, expectations for jobs and incomes over the next six months held relatively steady. While consumer confidence has fallen across all age and income categories over the past three months, May’s decline reflects a particularly notable worsening in the outlook among consumers over 55 years of age.

“Consumers’ inflation expectations remain elevated, but stable. Consumers in May expected inflation to average 6.1% over the next 12 months—essentially unchanged from 6.2% in April, though down substantially from the peak of 7.9% reached last year.

Nonetheless, consumers continued to view inflation as a major influence on their view of the U.S. economy. Plans to purchase homes in the next six months held steady in May at around 5.6%, but was still notably down from 6% to 7% in Q4 2022. Meanwhile, plans to purchase autos and big-ticket appliances ticked up somewhat compared to April.” 

Other measurements by the organization include:

The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—decreased to 148.6 from 151.8 last month.

The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—decreased slightly to 71.5 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.

Present Situation

Consumers’ assessment of current business conditions improved marginally in May.

  • 19.6% of consumers said business conditions were “good,” up from 19.0% last month.
  • 17.0% said business conditions were “bad,” down from 18.1%.

Consumers’ appraisal of the labor market deteriorated.

  • 43.5% of consumers said jobs were “plentiful,” down from 47.5%.
  • 12.5% of consumers said jobs were “hard to get,” up from 10.6% last month.

Expectations Six Months Hence

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

  • 12.9% of consumers expect business conditions to improve, down from 14.1%.
  • Meanwhile, 20.6% expect business conditions to worsen, down slightly from 21.4%.

Consumers’ assessment about the short-term labor market outlook was slightly more favorable.

  • 13.6% of consumers expect more jobs to be available, down from 14.3%.
  • However, 20.2% anticipate fewer jobs, down from 21.3%.

Consumers’ short-term income prospects was, on balance, slightly more favorable.

  • 17.8% of consumers expect their incomes to increase, up slightly from 17.3% last month.
  • 11.5% expect their incomes will decrease, same as last month.