The Conference Board Consumer Confidence Index held steady in May, following a sharp decline in April. The Index now stands at 86.6 (1985=100), up from 85.7 in April.
The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – declined from 73.0 to 71.1. However, the Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – improved from 94.3 in April to 96.9 this month.
The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by Nielsen. The cutoff date for the preliminary results was May 14.
“Following two months of rapid decline, the free-fall in Confidence stopped in May,” says Lynn Franco, senior director of economic indicators at The Conference Board. “The severe and widespread impact of COVID-19 has been mostly reflected in the Present Situation Index, which has plummeted nearly 100 points since the onset of the pandemic. Short-term expectations moderately increased as the gradual re-opening of the economy helped improve consumers’ spirits. However, consumers remain concerned about their financial prospects. In addition, inflation expectations continue to climb, which could lead to a sense of diminished purchasing power and curtail spending. While the decline in confidence appears to have stopped for the moment, the uneven path to recovery and potential second wave is likely to keep a cloud of uncertainty hanging over consumers’ heads.”
Consumers’ assessment of current conditions declined further in May. The percentage of consumers claiming business conditions are “good” decreased from 19.9 percent to 16.3 percent, while those claiming business conditions are “bad” increased from 45.3 percent to 52.1 percent. Consumers’ appraisal of the job market was mixed. The percentage of consumers saying jobs are “plentiful” decreased from 18.8 percent to 17.4 percent; however, those claiming jobs are “hard to get” decreased from 34.5 percent to 27.8 percent.
Consumers, however, were moderately more optimistic about the short-term outlook. Those expecting business conditions will improve over the next six months increased from 39.8 percent to 43.3 percent, while those expecting business conditions will worsen decreased, from 25.1 percent to 21.4 percent.
Consumers’ outlook for the labor market was mixed. The proportion expecting more jobs in the months ahead declined from 41.2 percent to 39.3 percent; however, those anticipating fewer jobs in the months ahead also decreased, from 21.2 percent to 20.2 percent. Regarding their short-term income prospects, the percentage of consumers expecting an increase declined from 17.2 percent to 14.0 percent; however, the proportion expecting a decrease declined from 18.4 percent to 15.0 percent.