U.S. Consumer Confidence Deteriorates in May

The Conference Board's Index of Consumer Confidence Index fell 1.4% (-0.9% y/y) to 102.3 following a 0.3% slip to 103.7 during April, revised from 101 .3. It was the lowest level of confidence in six months. The index was 20.6% below its most recent peak in June 2021. A reading of 99.1 for May had been expected in the Action Economics Forecast Survey.

Performance amongst the component series remained mixed. The Expectations Index eased 0.3% (-3.0% y/y) to 71.5 following a 3.1% April decline to 71.7, revised from 68.1. The index was 36.1% below its March 2021 peak. The Present Situation Index fell 2.1% (+0.8% y/y) to 148.6 following a 1.9% increase to 151.8, revised from 151.1. It stood 6.9% below its June 2021 peak.

Consumers' assessment of current business conditions improved m/m as 19.6% of respondents characterized conditions as good in May. Labor market readings continued to deteriorate this month. The jobs gap, representing the difference between respondents indicating that jobs are plentiful versus those saying jobs are hard to get, fell to 31.0% this month from 36.9% in April. Calculated by Haver Analytics, this series has a 65% correlation with the unemployment rate over the last ten years. The jobs plentiful measure fell to 43.5%, the lowest level since April 2021, down from the March 2022 high of 56.7. The jobs hard to get measure rose to 12.5%, which was increased from a 10.5% low in February.

Consumers assessment of future business conditions fell as a lessened 12.9% of respondents felt that conditions would get better in six months. It was the lowest percentage in roughly twelve years. Fourteen percent of respondents felt there would be more jobs in six months, the fewest since July 2016. An improved 17.8% expected income to increase in six months, up from 14.4% February low.

The expected inflation rate in twelve months edged down to 6.1% from 6.2% in April. It remained below the 7.9% high in June of last year. Nevertheless, it remained well above the 4.4% low in January 2020.

An increased 61.1% of respondents felt that interest rates would be higher in twelve months while a steady 11.4% thought they would be lower. A lessened 28.6% of respondents thought that stock prices would be higher in twelve months and an increased 37.5% thought they would be lower.

The share of respondents planning to buy a home within six months was fairly steady at 5.6%, below the October high of 7.4%. It nevertheless remained higher than its 4.5% low in July of last year. Those planning to buy a major appliance rose sharply m/m to 45.8% of respondents this month but it’s fallen from a high of 52.4% in October.

The Consumer Confidence data are available in Haver's CBDB database. The total indexes, which are indexed to 1985=100, appear in USECON, and market expectations are in AS1REPNA.