US consumer confidence rises to reverse modest drop
Print Edition
US consumer confidence rose in May, reversing the prior month’s modest decline as consumers’ mood grew rosier, according to a survey released yesterday.
The uptick in positive sentiment suggested the world’s largest economy was improving in the second quarter of the year but expectations for the near future held steady.
But despite the massive tax cuts in December, fewer respondents felt their incomes were likely to rise in the coming months, according to the Conference Board survey.
The consumer confidence index rose 2.4 points to 128, up from April’s 125.6, which was revised down. The May result was narrowly better than economists’ expectations, the survey showed.
The present situation index rose 4.2 points to 161.7, its highest level since 2001, while expectations for the near term also moved up a token 1.3 points to 105.6.
“Consumers’ assessment of current conditions increased to a 17-year high,” Lynn Franco, the board’s head of economic indicators, said in statement.
However, “Consumers’ short-term expectations improved modestly, suggesting that the pace of growth over the coming months is not likely to gain any significant momentum.”
Job market assessment mixed
The share of respondents saying business conditions were good rose 2.6 points to 38.4 percent but their assessment of the jobs market was mixed: the share saying jobs were “plentiful” rose but so did the share of those saying jobs were “hard to get.”
The short-term outlook also was modestly better: those saying conditions would improve fell a half percentage point to 23.6 percent, but those believing conditions would worsen fell 1.5 points to 8.3 percent.
Those expecting more jobs in the coming months rose 1.1 points to 19.7 percent but those anticipating that jobs will be less plentiful also rose six tenths to 13.9 percent.
Consumers were less optimistic about wages: those expecting higher income fell a half a point to 21.3 percent and those expecting wages to fall rose three tenths to 8.2 percent.
Ian Shepherdson of Pantheon Macroeconomics noted that the 12-month inflation expectations measure rose by three tenths to five percent, the highest since September 2016.
“One monthly increase does not make a trend, and this likely is a response to higher gas prices,” he said, adding that the Federal Reserve members “do not want to see a sustained increase in these numbers.”
The Fed is widely expected to raise the benchmark interest rate in mid-June for the second time this year, but expects inflation to remain around its two percent target.
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