USA: Slight drop in consumer confidence in May

The Conference Board index stood at 106.4 points against 108.6 points in April.

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Consumer confidence deteriorated slightly in May in the United States, with consumers expecting to spend less in the coming months due to persistently high inflation, to which are now added rising interest rates.

In May, the index stood at 106.4 points against 108.6 points in April, according to the Conference Board index released on Tuesday.

However, it is much better than expected by a consensus of analysts who saw the index fall to 103.7 points.

This index also paints a more optimistic picture of consumer confidence than that of the University of Michigan, published on Friday, which showed a sharp deterioration in the situation in May with an index at its lowest since August 2011, also due to inflation and rising interest rates.

“Consumer confidence fell slightly in May, after rising slightly in April,” Lynn Franco, senior director of economic indicators at The Conference Board, was quoted in a statement as saying.

In detail, the index measuring the current situation fell to 149.6 points, against 152.9 points last month. The one measuring the outlook drops to 77.5 points, against 79.0 points.

“The drop in the current situation index is due solely to a perceived easing of labor market conditions”, which had been facing a labor shortage for months, and was therefore very favorable to employees who were doing compete with employers to obtain better wages and conditions.

“Purchase intentions for cars, homes, major appliances, etc. all slowed down, probably reflecting rising interest rates (…). Vacation plans have also declined due to rising prices,” explains Lynn Franco.

“Inflation remains a major concern for consumers,” she added.

Inflation slowed somewhat in April, after hitting 40-year highs in March. It nevertheless remains at a very high level, at 6.3% over one year according to the PCE index – favored by the central bank – and 8.3% according to the CPI index – on which pensions are indexed, in particular.

President Joe Biden has assured that inflation is his economic priority, and is due to meet on Tuesday at the White House, on this subject, with Treasury Secretary Janet Yellen and the President of the American central bank (Fed) Jerome Powell.

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