in May, the Conference Board Consumer Confidence Index® experienced a decline, dropping to 102.3 (1985=100) from an upwardly revised 103.7 in April. The decrease was observed in both the Present Situation Index, which is based on consumers’ assessment of current business and labor market conditions, and the Expectations Index, which reflects consumers’ short-term outlook for income, business, and labor market conditions. The Present Situation Index decreased to 148.6 (1985=100) from 151.8 last month, while the Expectations Index slightly decreased to 71.5 (1985=100) from 71.7.
Since February 2022, the Expectations Index has consistently remained below 80, a level associated with a recession within the next year, except for a brief uptick in December 2022
The Conference Board, stated that consumer confidence declined in May, with consumers having a slightly less positive view of current conditions while their expectations remained negative. The assessment of current employment conditions experienced the most significant deterioration, as the percentage of consumers reporting jobs as ‘plentiful’ dropped by 4 percentage points, declining from 47.5% in April to 43.5% in May. Additionally, consumers displayed a more pessimistic outlook regarding future business conditions, which affected the expectations index. However, expectations for jobs and incomes over the next six months remained relatively stable. While consumer confidence has decreased across all age and income groups in the past three months, the decline in May particularly reflects a notable worsening of the outlook among consumers aged 55 and above.
In terms of inflation, consumers’ expectations remained elevated yet stable. In May, consumers anticipated an average inflation rate of 6.1% over the next 12 months, which was essentially unchanged from 6.2% in April, although significantly lower than the peak of 7.9% reached last year. Nevertheless, consumers continued to perceive inflation as a major factor influencing their view of the U.S. economy. Plans to purchase homes within the next six months remained steady at around 5.6% in May but were noticeably lower compared to 6 to 7% in Q4 2022. Meanwhile, intentions to purchase automobiles and big-ticket appliances showed a slight increase compared to April.