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Economy in Brief

U.S. Consumer Confidence Falls Again
by Tom Moeller  May 29, 2012

The Conference Board's Index of Consumer Confidence during May fell for the fourth month in the last five. The 5.5% decline to 64.9 was from 68.7 last month, initially reported as 69.2. Nevertheless, the index remained up by more-than half from the October low. The May number was well below Consensus estimates for 70.0. During the last ten years there was been a 48% correlation between the level of confidence and the three-month change in real PCE.

The decline in overall confidence reflected-broad-based weakness. The present situation component fell 10.4% (+16.8% y/y) and reversed the prior two months' gains. Respondents indicating that business conditions were good fell sharply. In addition, the percentage reporting that jobs were hard to get rose to its highest (41.0%) since January.

The expectations component of confidence was down by 3.5% (+1.2% y/y), also off for the fourth month this year. The percentage expecting business conditions to improve fell to its lowest since November while the percent expecting more jobs declined to its least since December.

Expectations for inflation in the next twelve months fell m/m to 5.6% versus 6.2% in March. The percentage of people looking for stock prices to rise also dropped sharply this month to 30.8% but the percent who are bearish remained low at 31.6%. The percentage expecting higher interest rates fell to 46.4%

Headline figures on consumer confidence are carried in Haver's USECON database. The Conference Board's detailed data are found in Haver's CBDB database, and the consensus expectations figure is from Actions Economics, as tabulated in the AS1REPNA database.

Conference Board (SA, 1985=100) May Apr Mar Y/Y % 2011 2010 2009
Consumer Confidence Index 64.9 68.7 69.5 5.2 58.1 54.5 45.2
Present Situation 45.9 51.2 49.9 16.8 36.2 25.7 24.0
Expectations 77.6 80.4 82.5 1.2 72.8 73.7 59.3
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