US consumer confidence index wanes to 102.3 in May 2023

The expectations index—based on consumers’ short-term outlook for income, business, and labour market conditions—decreased slightly to 71.5 (1985=100) from 71.7. The expectations index has now remained below 80—the level associated with a recession within the next year—every month since February 2022, with the exception of a brief uptick in December 2022, according to the Consumer Confidence Survey carried out by tech company The Conference Board.

May saw a marginal improvement in consumers’ assessment of business conditions, but a pessimistic outlook for the labour market. A slight increase to 19.6 per cent of consumers rated conditions as ‘good’, while a decrease to 17.0 per cent viewed them as ‘bad’. However, those stating jobs were ‘plentiful’ dropped to 43.5 per cent and those finding jobs ‘hard to get’ increased to 12.5 per cent.

Looking ahead, consumer expectations remained pessimistic for business conditions but were slightly optimistic for the labour market. Consumers’ short-term income prospects improved slightly, with a marginal increase in those expecting an income increase.

Ataman Ozyildirim, senior director, economics at The Conference Board, said: “Consumer confidence declined in May as consumers’ view of current conditions became somewhat less upbeat while their expectations remained gloomy. Their assessment of current employment conditions saw the most significant deterioration, with the proportion of consumers reporting jobs are ‘plentiful’ falling 4 ppts from 47.5 per cent in April to 43.5 per cent 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 per cent over the next 12 months—essentially unchanged from 6.2 per cent in April, though down substantially from the peak of 7.9 per cent reached last year. Nonetheless, consumers continued to view inflation as a major influence on their view of the US economy. Plans to purchase homes in the next six months held steady in May at around 5.6 per cent, but was still notably down from 6 to 7 per cent in Q4 2022.”

Fibre2Fashion News Desk (NB)