US consumer confidence dips in May
By Michele Maatouk
Date: Tuesday 31 May 2022
(Sharecast News) - US consumer confidence declined slightly in May amid worries about inflation, according to a survey released on Tuesday.
The Conference Board's consumer confidence index fell to 106.4 from 108.6 in April, but was above consensus expectations for a reading of 103.8.
The present situation index, which is based on consumers' assessment of current business and labour market conditions, dipped to 149.6 in May from 152.9 the month before. Meanwhile, the expectations index, based on consumers' short-term outlook for income, business, and labour market conditions, fell to 77.5 from 79.0.
Lynn Franco, senior director of Economic Indicators at the Conference Board, said: "The decline in the present situation index was driven solely by a perceived softening in labour market conditions. By contrast, views of current business conditions- which tend to move ahead of trends in jobs - improved.
"Overall, the present situation index remains at strong levels, suggesting growth did not contract further in Q2. That said, with the expectations index weakening further, consumers also do not foresee the economy picking up steam in the months ahead. They do expect labour market conditions to remain relatively strong, which should continue to support confidence in the short run."
Franco noted that purchasing intentions for cars, homes, major appliances, and more all cooled and said this was likely a reflection of rising interest rates and consumers pivoting from big-ticket items to spending on services.
"Vacation plans have also softened due to rising prices. Indeed, inflation remains top of mind for consumers, with their inflation expectations in May virtually unchanged from April's elevated levels," she said. "Looking ahead, expect surging prices and additional interest rate hikes to pose continued downside risks to consumer spending this year."
Oxford Economics said: "Inflation remains a key deterrent of sentiment and consumers will remain downbeat until price pressures materially decelerate in late 2022 and early 2023.
"A slightly softer perception of labour market conditions also suggests that confidence will continue to face downside risks as the Fed looks to aggressively restrain prices and recession risks have risen in recent weeks."
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