The Conference Board's Consumer Confidence Index was nearly unchanged in May, increasing to 93.2, up 0.2 points from the revised 93.0 in April. This came in just below economists' expectations of 94.1. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
Confidence was little changed across both portions of the Conference Board index. The Present Conditions index fell 0.1 point to 90.3 in May. This index measures how consumers perceive the current state of the economy.
The Expectations portion of the index, a measure of future economic activity, increased to 95.2 in May from 94.8 in April.
The University of Michigan's Consumer Sentiment Index, a comparable index, fell in May, dropping to 90.2 from 94.2 in April. Each of the component indices declined. The Present Conditions index was 1.4 points lower in May at 103.6, while the Expectations portion fell to 81.6 from 87.3 in April. The index fell four points from the preliminary mid-month reading and the final release at the end of May. This may indicate that confidence waned as the month progressed.
Several factors are negatively impacting consumer confidence. Rising energy prices, renewed terrorist fears and lack of pent-up demand are concerns. Fluctuations in the stock market and inflationary pressures also weigh on consumers.
However, there are still factors to support consumer confidence. Labor markets have been improving in recent months. Household wealth is high and interest rates remain at relatively low levels.
Consumer confidence is expected to gradually rise over time as the labor market strengthens and overall recovery continues, though continued fluctuations are likely. Since consumer spending accounts for two-thirds of the U.S. economy, consumer confidence is a closely watched economic indicator.
Sources: www.conference-board.com
www.economy.com
