Consumers’ view of the U.S. economy has been shaped by the ongoing conflict between the U.S. and Iran, which has boosted inflation in large part due to rising energy prices. The uncertain timeline for an end to the conflict has in turn led to an uncertain economic outlook, including by those at the Federal Reserve.
Per the latest findings of the nonprofit Conference Board collected from May 1-19, consumer confidence in the economy dropped in May by 0.7 points to 93.1. (The index is measured against readings from 1985, indexed at 100.) This also correlates with a drop in consumer sentiment found by the University of Michigan.
“Consumer confidence edged downward in May as the inflationary impacts of the war in the Middle East intensified,” said Dana M. Peterson, chief economist of the Conference Board. The Present Situations Index, based on consumers’ outlook on the current state of the economy and labor market, dropped month-over-month by 3.2 points, coming in at 121.2.
However, the forward looking Expectations Index rose slightly by one point to 74.4. This indicates marginal improvement to consumers’ outlook on the short-term economy. Within the Expectations Index, consumers’ expectations for business conditions and the labor market inched up, while expectations for household income were less improved.
“Consumer appraisals of current business conditions and the current labor market were moderately less positive compared to last month,” Peterson continued. “This was somewhat offset by modest improvements in consumers’ expectations for business conditions and the labor market six months from now. Meanwhile, income expectations eased in May, as those anticipating less income rose.”
Demographic wise, confidence ticked up for consumers aged 35-54; both younger and older consumers’ confidence instead ticked downward. Income-wise, confidence trended up for higher income groups on a six-month basis. Across political affiliation, Republicans remain the most confident consumer group overall, though only Independents saw an increase in consumer confidence on a six-month basis in May.
For the full Consumer Confidence release, click here.
