United States: Consumer confidence eases further in May
May 30, 2017
The Conference Board’s consumer confidence index declined for a second straight month in April but still signaled widespread optimism among U.S. consumers. The index fell from a revised 119.4 in April (previously reported: 120.3) to 117.9 in May, well below expectations of a small pick-up to 119.8 but still high by historical standards. The index remains firmly well above the 100-point threshold that separates optimism from pessimism among consumers.
May’s headline figure reflected a further dip in consumers’ views regarding future economic conditions. The index has now fallen for two months in a row, which suggests that consumers are becoming increasingly skeptical about President Donald Trump’s ability to deliver on promises to boost the U.S. economy. Conversely, consumers’ assessment of the present economic conditions edged up in May after declining in April, which is likely reflective of strong payroll growth—to be confirmed in Friday’s employment report. In line with this, the labor differential—the difference between the percentage of respondents that state that jobs are plentiful and those that say they are hard to get—widened in May.
The strength displayed by recent consumer confidence readings has yet to translate into stronger consumer spending. Indeed, a second estimate of GDP showed private consumption growing a mere 0.6% in seasonally-adjusted annualized terms, the worst reading since Q4 2009, despite over decade-high sentiment figures. While May’s print suggests a slightly less optimistic mood among U.S. citizens, it also showcases consumers’ better assessment of the lack of headway President Trump has had in most of his campaign pledges.
Author: David Ampudia, Economist