Consumer confidence in business and labor market conditions decreased slightly in May, likely due to continuing concerns about inflation and future interest rate hikes. Intent to make major purchases—things like cars, homes, and major appliances—has decreased as a result.
The Conference Board, a think tank and research group, publishes a monthly report of its Consumer Confidence Index, an assessment of consumers’ attitudes, expectations, and buying intentions with regard to the stock market, interest rates, and inflation.
The most recent report
was published May 31 and shows slight decreases in confidence across the board, both in consumers’ assessment of the present and expectations for the future. Here’s a breakdown of the details from Jerry
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Present assessment
Consumers’ assessment of current business conditions improved very slightly (an increase of less than 1%) from last month, though the report doesn’t specify what it means by “business conditions.”
Consumers view the labor market less favorably: 51.8% said jobs were “plentiful” in May, down from 54.8% in April. Similarly, 12.5% said jobs were “hard to get,” up from 10.1% in April.
“Overall, the Present Situation Index remains at strong levels, suggesting growth did not contract further in Q2,” said Lynn Franco, the organization’s senior director of economic indicators. “That said, with the Expectations Index weakening further, consumers also do not foresee the economy picking up steam in the months ahead.”
Future expectations
The “Expectations Index,” which shows consumers’ outlook on business and labor conditions in the next six months, showed a similarly slight decrease in confidence: 24.9% expect business conditions to worsen, up from 21.7% in April. About one percent fewer people expect business conditions to improve: 17.7% in May, down from 18.6% in April.
Consumers’ outlook on the future of the labor market was virtually unchanged from April to May.
“Purchasing intentions for cars, homes, major appliances, and more all cooled,” Franco said, “Likely a reflection of rising interest rates and consumers pivoting from big-ticket items to spending on services. Vacation plans have also softened due to rising prices. Indeed, inflation remains top of mind for consumers, with their inflation expectations in May virtually unchanged from April’s elevated levels.”
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