May 30, 2023 | 11:17
U.S. Consumer Confidence Comes Down in May
The Conference Board's U.S. consumer confidence index fell for the second straight month, down 1.4 pts to 102.3 in May. That marked a six-month low amid a number of economic headwinds, including tighter lending conditions and still-high underlying price pressures.
Views about the 'present situation' fell 3.2 pts to 148.6 but have held within a tight range after hitting a post-pandemic high of 159.6 back in June 2021. Meantime, the ‘expectations’ component remained subdued, down 0.2 pts to 71.5. There was some good news on the outlook for inflation (12 months ahead). It ticked down to 6.2%, the lowest since the start of 2021 and well below the record high of 7.9% seen in both March and June of last year. The nice decline was largely driven by lower gas prices—although they have edged up more recently, they are still more than $1/gallon below last summer’s peak.
On the employment front, the share of respondents expecting more job opportunities in the next six months fell to 13.6%, the lowest since 2016. Meantime 43.5% of respondents agreed that “jobs remain plentiful”, the lowest since April 2021. Together, this would suggest the tight labour market may be moderating. Meantime, the share who found “jobs hard to get” climbed 1.9 ppts to 12.5%. On net, the labour differential deteriorated to 31.0% from 36.9% in the prior month. We are expecting the jobless rate to tick up after returning to a cycle low of 3.4% in April. The nonfarm payrolls report will be out on Friday (June 2).
Buying plans picked up for big-ticket items such as cars, major appliances and homes. Earlier this morning, the S&P CoreLogic Case-Shiller report showed home prices for the country's 20 largest cities climbed 0.5% in March, halting eight straight monthly declines. Limited supply is putting a floor under prices.
Bottom Line: Consumer confidence, as measured by the Conference Board, fell to a six-month low in May. Compared to a year ago, sentiment hasn’t made much progress amid fears of a downturn, tighter credit conditions, and persistent underlying price pressures.