Consumer confidence in the economy saw a slight improvement in May, as per the latest data released by The Conference Board on Tuesday. This comes after a few months of continuous decline.
According to the monthly survey conducted by the business group, the consumer confidence index experienced an increase from 97.5 in April to 102 in May.
According to Dana Peterson, chief economist at The Conference Board, the overall confidence gauge has remained relatively stable for over two years.
Consumer confidence took a significant hit when the COVID-19 pandemic emerged in 2020. Fortunately, it started to bounce back in 2021. Unfortunately, this positive trend was short-lived as consumer confidence once again declined in late 2021 and early 2022 due to the alarming surge in inflation, reaching a 40-year high.
According to the survey, consumers have expressed a more positive outlook on current business and market conditions, as well as their short-term expectations for the future. In May, the present situation index increased from 140.6 to 143.1, while the expectations index rose from 68.8 to 74.6.
According to the survey, Americans had a slightly more negative perception of current business conditions. However, they expressed more positive views on the current labor market.
In May, there was a slight decrease in the percentage of consumers who regarded business conditions as “good”, dropping from 20.8 percent to 20.3 percent.
Although fewer consumers, around 37.5 percent, reported that jobs were “plentiful” last month, there was also a decrease in the number of individuals, approximately 13.5 percent, who believed that jobs were “hard to get.” The slight shift in the latter outweighed the former.
In the coming six months, a majority of consumers anticipate an improvement in business conditions, with more jobs becoming available and their income increasing. However, it is worth noting that The Conference Board has observed that the overall expectations index is still below 80, which is often seen as a potential sign of an upcoming recession.
According to the survey, consumers have started to perceive a higher likelihood of a recession for the second consecutive month.
President Biden has faced challenges in changing the predominantly unfavorable views of the economy, which poses a significant hurdle as he gears up to go head-to-head with former President Trump in November.
Inflation has seen a significant improvement after reaching a 40-year high of 9.1 percent in June 2022. As of April, it has fallen to 3.4 percent. Despite this positive development, it still remains above the Federal Reserve’s target. As a result, the central bank has decided to maintain higher interest rates for a longer period of time.
Despite interest rates being at a two-decade high, the labor market has proven to be unexpectedly strong, consistently surpassing expectations and keeping the unemployment rate below 4 percent.