U.S. Consumer Confidence Recovers in May

The Conference Board's Index of Consumer Confidence rose 4.6% (-0.5% y/y) to 102.0 in May after falling 5.4% to 97.5 in April, revised from 97.0. A May reading of 96.1 had been expected in the Action Economics Forecast Survey. Despite the rise, the latest level remains below the high of 137.9 in October 2018 and below the latest high of 114.0 in July of last year.

The Present Situations Index rose 1.8% (-3.9% y/y) to 143.1 in May after it fell 4.2% in April to 140.6, revised from 142.9. The index declined 0.5% in March and 4.7% in February. The Expectations Index rose 8.4% (4.3% y/y) in May to 74.6 after declining 7.0% in April to 68.8, which was the lowest point since July 2022. The index declined 3.0% in March and 6.4% in February.

A lessened 20.3% of respondents characterized current business conditions as good in May, remaining below its high of 23.4% in June 2023. Labor market readings improved this month. The jobs gap, representing the difference between respondents indicating that jobs are plentiful and those saying jobs are hard to get, rose to 24.0% this month from 22.9% in April. The reading remained below the March 2022 high of 47.1%. Calculated by Haver Analytics, this series has a 64% correlation with the unemployment rate over the last ten years. The jobs plentiful measure fell to 37.5% from 38.4% and remained below the March 2022 high of 56.7%. The jobs hard-to-get reading of 13.5% compared to 15.5% in April and a recent high of 15.6% six months ago. The jobs not-so-plentiful reading rose to 49.0% from 46.1% in April and remained well above its 30.5% low in September 2021.

In May, a fairly steady 13.3% of consumers believed that business conditions in six months would improve and a lessened percentage of 16.8% believed they would worsen. A slightly higher 12.6% of respondents felt there would be more jobs in six months, down from a high of 41.2% in April 2020 and below a more recent high of 20.0% in December of 2022. A steady 16.9% expected income to increase in six months, down from 18.3% in December and below a high of 19.6% in October of 2022.

The expected inflation rate in twelve months of 5.4% compared to 5.3% in April. It was increased from a February low of 5.2% but remained below the 7.9% high in June 2022. The reading was above the 4.4% low in January 2020.

A higher 56.2% of respondents felt that interest rates would be higher in twelve months, up from a low of 42.1% in January. A greatly diminished 17.3% thought they would be lower. An increased 48.2% of respondents believed that stock prices would be higher in twelve months. A lessened 25.4% thought stock prices would be lower in twelve months versus a high of 44.7% in July of 2022. The share of respondents planning to buy a home within six months declined to 5.0% from 5.2% and remained below the October 2022 high of 7.4%. The percentage of respondents planning to buy a major appliance surged to 49.4% from 43.0% in April and reached the highest level since June of last year.

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.