According to the Conference Board’s Consumer Confidence Index, consumers remain leery about future business conditions and are increasingly apprehensive about the availability of new jobs and income growth opportunities over the next six months. Consumers’ inflation expectations for 12 months hence also increased in May as households continue to feel the effects of high prices for food and energy. All told, these results could presage constrained consumer spending activity, which could in turn weigh on broader economic growth.
While consumers’ took a much more negative view on their 6-month outlook of business conditions compared to last month, they were less pessimistic with regard to current economic conditions. The current conditions component of the index declined just 2% to a reading of 39.3 in May and the percentage of those reporting “good” business conditions slipped slightly from 15.5% last month to 14.6%. Despite steady employment growth above 200,000 jobs per month in the past three months, consumers maintain a glum view of current job market conditions, with the percentage of consumers reporting jobs as hard to get rose from 42.4 to 43.9.
Although the assessments of current conditions from the Conference Board’s Consumer Confidence Index and University of Michigan Consumer Sentiment Survey are similar, the latter survey reported a 12.8% increase in its expectations index in May. Relief from rising gasoline prices likely helped to improve consumers’ outlook in the University of Michigan Survey
There was no change compared to last month in terms of consumer sentiment toward the housing sector. The Conference Board reported 5% of consumers plan to buy a home within the next 6 months—the same share as last month. However, these self-identified buyers are largely focused on buying existing homes, with 3.2% reporting a planned purchase of a ‘lived-in’ house. For new homes, 0.6% in May indicated they had plans to buy a new home within the next 6 months, down from 1% in April.