Consumer Confidence Shows Signs Of Recovery In May
Consumer confidence, which had plummeted in March and April, held steady last month. The Conference Board Consumer Confidence Index stood at 86.6 in May, up from 85.7 in April, reflecting an improvement in consumers’ near-term expectations.
The Conference Board’s Present Situation Index, based on consumers’ assessment of current business and labor market conditions, declined from 73 to 71.1. However, the Expectations Index, based on consumers’ short-term outlook for income, business and labor market conditions, improved from 94.3 in April to 96.9 in May.
“Following two months of rapid decline, the freefall in Confidence stopped in May,” says Lynn Franco, senior director of economic indicators at The Conference Board. “The severe and widespread impact of COVID-19 has been mostly reflected in the Present Situation Index, which has plummeted nearly 100 points since the onset of the pandemic. Short-term expectations moderately increased as the gradual re-opening of the economy helped improve consumers’ spirits. However, consumers remain concerned about their financial prospects. In addition, inflation expectations continue to climb, which could lead to a sense of diminished purchasing power and curtail spending. While the decline in confidence appears to have stopped for the moment, the uneven path to recovery and potential second wave are likely to keep a cloud of uncertainty hanging over consumers’ heads.”
Consumers’ assessment of current conditions declined further in May. The Conference Board reports that the percentage of consumers claiming business conditions are “good” decreased from 19.9 percent to 16.3 percent, while those claiming business conditions are “bad” increased from 45.3 percent to 52.1 percent. Consumers’ appraisal of the job market was mixed. The share saying jobs are “plentiful” decreased from 18.8 percent to 17.4 percent, however, those claiming jobs are “hard to get” decreased from 34.5 percent to 27.8 percent.
Consumers’ outlook on short-term business conditions was more optimistic, however. Those expecting business conditions to improve over the next six months increased from 39.8 percent to 43.3 percent, while those expecting business conditions to worsen decreased from 25.1 percent to 21.4 percent.
The consumer outlook on the labor market was mixed in The Conference Board’s study. The percentage of those surveyed who expect more jobs in the months ahead declined from 41.2 percent to 39.3 percent, yet the share anticipating fewer jobs in the months ahead also decreased, from 21.2 percent to 20.2 percent. Regarding short-term income prospects, the percentage of consumers expecting an increase declined from 17.2 percent to 14 percent, while the proportion expecting a decrease declined from 18.4 percent to 15 percent.