U.S. Consumer Confidence Slides To Six-Month Low

U.S. consumer confidence dropped to a six-month low in May as Americans’ assessment of the labor market and the outlook for business conditions slipped.

The Conference Board’s* Consumer Confidence Index fell in May to 102.3 (1985=100), down from an upwardly revised 103.7 in April. 

Based on consumers’ assessment of current business and labor market conditions, the Present Situation Index decreased to 148.6 (1985=100) from 151.8 last month. Based on consumers’ short-term outlook for income, business and labor market conditions, the Expectations Index fell slightly to 71.5 (1985=100) from 71.7. The Expectations Index has remained below 80—the level associated with a recession within the next year—every month since February 2022, except for a brief uptick in December 2022.

“Consumer confidence declined in May as consumers’ view of current conditions became somewhat less upbeat while their expectations remained gloomy,” said Ataman Ozyildirim, senior director, Economics at The Conference Board. “Their assessment of current employment conditions saw the most significant deterioration, with the proportion of consumers reporting jobs are ‘plentiful’ falling four ppts from 47.5 percent in April to 43.5 percent in May. Consumers also became more downbeat about future business conditions, weighing on the expectations index. However, expectations for jobs and incomes over the next six months held relatively steady. While consumer confidence has fallen across all age and income categories over the past three months, May’s decline reflects a particularly notable worsening in the outlook among consumers over 55 years of age.

“Consumers’ inflation expectations remain elevated but stable. Consumers in May expected inflation to average 6.1 percent over the next 12 months—essentially unchanged from 6.2 percent in April, though down substantially from the peak of 7.9 percent reached last year. Nonetheless, consumers continued to view inflation as a major influence on their view of the U.S. economy. Plans to purchase homes in the next six months held steady in May at around 5.6 percent but was still notably down from 6 to 7 percent in Q4 2022. Meanwhile, plans to purchase autos and big-ticket appliances ticked up somewhat compared to April,” continued Ozyildirim.

Present Situation
Consumers’ assessment of current business conditions improved marginally in May, with 19.6 percent of consumers saying business conditions were “good,” up from 19.0 percent last month, and 17.0 percent saying business conditions were “bad,” down from 18.1 percent.

Consumers’ appraisal of the labor market fell with 43.5 percent of consumers saying jobs were “plentiful,” down from 47.5 percent, and 12.5 percent saying jobs were “hard to get,” up from 10.6 percent last month.

Six Month Expectation 
Consumers remained pessimistic about the short-term business conditions outlook in May, with 12.9 percent expecting business conditions to improve, down from 14.1 percent, and 20.6 percent expecting business conditions to worsen, down slightly from 21.4 percent.

Consumers’ assessment of the short-term labor market outlook was slightly more favorable, with 13.6 percent of consumers expecting more jobs to be available, down from 14.3 percent; however, 20.2 percent anticipate fewer jobs, down from 21.3 percent.

Consumers’ short-term income prospects were slightly more favorable, with 17.8 percent expecting incomes to increase, up from 17.3 percent last month and 11.5 percent expecting their incomes would decrease, the same as last month.

The monthly Consumer Confidence Survey, based on an online sample, is conducted by The Conference Board by Toluna; The cutoff date for the preliminary results was May 22.