United States: Consumer confidence strengthens in May amid favorable employment assessments
May 29, 2018
Consumer confidence increased in May after a slight dip in April with the Conference Board’s monthly consumer confidence index rising to 128.0 in May from a downwardly-revised 125.6 in April (previously reported: 128.7). The print was in line with market expectations. The index remains well above the 100-point threshold that separates consumer optimism from pessimism.
Higher confidence in May was driven by consumers’ more optimistic assessment of current conditions, which hit a 17-year high. Households’ perspective on the near-term future also improved moderately. The labor differential—the difference between the percentage of respondents who state that jobs are plentiful and those who say that jobs are hard to get—increased to 26.6 in May from 22.7 in April (previously reported: 22.9), the best reading in 17 years. Consumers also had a more positive assessment of labor market prospects, with a higher proportion expecting more jobs in the upcoming months, despite an increase in respondents expecting fewer jobs.
On the downside, consumers were less upbeat about their short-term income prospects. Likewise, consumers were less willing to purchase big-ticket items as the share of respondents who expressed plans to purchase major appliances, homes and autos in the next six months declined.
Consumer confidence continues to hover around historically high levels and suggests the economy will continue to grow at a solid pace. Nonetheless, households’ less optimistic view of income expectations combined with their hesitancy to purchase big-ticket items could signal weaker consumer spending in the second quarter.
Author: Lindsey Ice, Economist