Consumer confidence falls unexpectedly in May
Consumer confidence fell in May as Americans grew slightly more pessimistic about future job prospects and business conditions, according to a closely followed survey.
The nonprofit Conference Board said its consumer confidence index fell to 60.8 in May — the lowest reading in six months — from a revised 66 in April. Economists polled by MarketWatch had forecast an increase to 67.5.
The decline in the Conference Board index conflicts with another survey that showed an increase in consumer confidence in May because of a drop in gasoline prices.
Economists say the Conference Board index is more closely linked to the health of the U.S. labor market than the Thomson Reuters/University of Michigan survey, which might explain the difference.
Still, most economists were surprised by the decline. Some blamed a downward spiral in housing prices, recent weakness in the economy and even a series of tornados and floods racking parts of the U.S.
A few suggested that the decline could be an aberration in an index that’s often volatile on a month-to-month basis.
Lynn Franco, director of consumer research at the Conference Board, said a “more pessimistic outlook” is responsible for the pullback in the index. Inflation concerns also rose.
“Consumers are considerably more apprehensive about future business and labor market conditions as well as their income prospects,” she said.
The expectations index, which measures the view of consumers in the next six months, fell to 75.2 in May from 83.2 in April. It’s the lowest reading since October.
A slightly higher percentage of consumers expect business conditions to get worse over the next six months — 15.5% versus 14% in April. And 20.8% expect fewer jobs to be available, compared with 18.7% in April.
For the present, however, consumers did not appear quite as pessimistic. The board’s present situation index barely fell, to 39.3 last month from 40.2 in April.
The consumer confidence index remains low by historical standards. In a healthy economy, the index averages about 95.
The index has more than doubled, however, since touching a record low of 25.3 in February 2009.
Bartash writes for MarketWatch.com/McClatchy.
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