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First Cut: Consumer Confidence Index showed worries about business and labor markets continued in May

The Conference Board’s Consumer Confidence Index rose slightly to 86.6 in May after a revised 85.7 in April (previously 86.9). If the six month outlook improved a bit to 96.9 in May from 94.3 in April, current conditions worsened to 71.1 after 73.0. The drop in consumer confidence occasioned by the arrival of the COVID-19 pandemic and the measures taken to fight its spread was not a one-month phenomenon and unless and until conditions in the labor market take a sustained turn for the better, is not likely to recover to the heights seen last year.

Consumers’ memories of the last recession are still fresh. The shock of COVID-19 hasn’t entirely erased the gains in confidence of the last few years, a lengthening downturn and worries about household balance sheets are likely to prevent an equal rebound in optimism.

The components related to the present showed a decrease in “good” business conditions and an increase in “bad” ones, and that jobs were less plentiful and harder to get. Consumers looked for somewhat better business conditions in the near future, and employment to rebound. Nonetheless, expectations for improvement in income was the lowest it has been in about nine years.

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