Consumer confidence continued to expand in May. The Conference Board's Consumer Confidence Index was 83.8, up 2.8 points from the revised 81.0 in April. This gain follows the nearly 20-point increase in April. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
Confidence was mixed across both portions of the Conference Board index. The Expectations portion of the index was responsible for the overall increase. This measure of future economic activity was 94.4, up 9.8 points from April.
The Present Conditions index, a factor in the total composite index, decreased to 67.9 from 75.2 in April. This index measures how consumers perceive the current state of the economy.
The University of Michigan's Consumer Sentiment Index, a comparable index, also increased in May to 92.1 from 86.0 in April. Like the Conference Board index, the component indices were mixed. The Expectations index gained 12.1 points to 91.4 in May, while the Present Conditions portion was down 3.2 points to 93.2.
Both confidence indices improved in May due to consumers' positive outlook for the future, as measured by the Expectations portion of the indices. Consumers expect business conditions to improve in the second half of the year. Despite these expectations, consumers remain concerned about current economic conditions with labor market uncertainties and high debt levels weighing on confidence.
Some factors encouraging consumer spending are modest interest rates, lower energy prices and the recent passage of an economic stimulus package. Since consumer spending accounts for two-thirds of the U.S. economy, consumer confidence will remain a closely watched and critical component for economic recovery.
Sources: www.cnnfn.com
www.conference-board.com
www.economy.com
