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Economy in Brief

U.S. Consumer Confidence Declines Again
by Tom Moeller  May 30, 2017

The Conference Board Consumer Confidence Index fell 1.3% during May (+27.6% y/y) to 117.9, following a little-revised 4.4% April decline to 119.4. The index was at its lowest level in three months. The Action Economics Forecast Survey looked for a 2.4% decline to 120.0. During the past thirty years, there has been a 70% correlation between the level of consumer confidence and the y/y change in real PCE.

The decline in confidence reflected a 2.7% fall (+30.7% y/y) in the expectations reading to 102.6. The present situation index edged 0.3% higher (24.3% y/y) to 140.7.

The percentage of respondents indicating that business conditions are "good" slipped to 29.4%, while the percentage saying business conditions are "bad" held steady at 13.7%. Respondents stating that jobs are "plentiful" eased to 29.9%. Nevertheless, it remained near the highest percentage since 2001. The percentage claiming jobs are "hard to get" declined to 18.2%, the fewest since February 2007. These changes in views on labor market conditions led to a slightly higher labor market differential (a reliable indicator of the unemployment rate) of 11.7 percentage points, remaining near its 2001 high.

The percentage expecting business conditions to improve over the next six months fell sharply to 21.3%. For labor markets, the percentage expecting more jobs in the months ahead declined to 18.6%, a six month low. The percentage of consumers expecting their incomes to strengthen rose slightly to 19.2%, but also remained near a six month low.

The expected rate of inflation in twelve months held steady at 4.7%. The percentage expecting higher interest rates over the next twelve months fell sharply to 67.5%, the fewest in six months.

Confidence amongst individuals over age 55 fell moderately for a second straight month. Confidence amongst individuals aged 35-to-54 also fell for a second month, but confidence amongst respondents under age 35 reversed the April decline and approached the 2000 high.

The Consumer Confidence data is available in Haver's CBDB database. The total indexes appear in USECON, and the market expectations are in AS1REPNA

Conference Board (SA, 1985=100) May Apr Mar Y/Y % 2016 2015 2014
Consumer Confidence Index 117.9 119.4 124.9 27.6 99.8 98.0 86.9
  Present Situation 140.7 140.3 143.9 24.3 120.6 111.7 87.4
  Expectations 102.6 105.4 112.3 30.7 86.1 88.8 86.6
Consumer Confidence By Age Group
  Under 35 Years 135.9 128.5 135.7 23.2 122.4 116.0 106.6
  Aged 35-54 Years 120.4 121.7 130.0 22.2 106.2 103.9 92.4
  Over 55 Years 108.2 112.5 115.4 39.6 84.6 84.1 73.8
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