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Economy in Brief

U.S. Consumer Confidence Remains Elevated During May
by Tom Moeller  May 25, 2021

• Confidence holds at fourteen-month high.

• Improvement in current conditions contrasts with lower expectations.

• Job market indexes continue to firm.

Consumer confidence remains strong. The Conference Board Consumer Confidence Index eased 0.3% (+36.4% y/y) to 117.2 during May following three consecutive months of firm gain to 117.5 during April, revised from 121.7. It remained up from the April 2020 low of 85.7. A reading of 120.0 was expected in the Action Economics Forecast Survey.

The Present Situation index improved 9.4% (111.0% y/y) to 144.3. This was the highest level since March of 2020, and more than double the year-ago figure. Offsetting this increase was an 8.2% decline (+1.5% y/y) in the Consumer Expectations reading to 99.1 in May.

The jobs gap, representing the difference between respondents indicating that jobs are plentiful and those saying jobs are hard to get, strengthened further to 34.6% from 21.6% in April. It continued to suggest great improvement in the job market, and the figure was just slightly below pre-pandemic levels. This series has had a 75% correlation with the unemployment rate over the last ten years. The rise last month in the labor market differential occurred as the jobs plentiful measure surged to the highest level since early last year. Conversely, the jobs hard-to-get index fell to the lowest level since January of last year.

Business conditions were perceived as good by a lessened 18.7% of respondents. Expectations that business conditions would improve in six months eased to 30.3%. More jobs were expected in six months by a lessened 27.2% of respondents, down from 35.4% in March. The percentage expecting income to increase fell sharply to 14.5%, about the same as twelve months earlier.

The expected inflation rate in twelve months rose to 6.5%. That was increased from 4.4% early last year. The share of respondents planning to buy a new home fell sharply to 0.4% from 0.7% in April. These reading are down from 2.0% early last year. Those planning to buy a major appliance plummeted to 41.9%, down from February's high of 52.9%.

Confidence of individuals under 35 years as well as between 35 and 54 was roughly unchanged at recently improved levels, but confidence amongst those over age 55 surged to the highest level since February of last year.

The Consumer Confidence data are available in Haver's CBDB database. The total indexes, which are indexed to 1985=100, appear in USECON, and the market expectations are in AS1REPNA.

Conference Board (SA, 1985=100) May Apr Mar May '20 2020 2019 2018
Consumer Confidence Index 117.2 117.5 114.9 85.9 101.0 128.3 130.1
   Present Situation 144.3 131.9 119.4 68.4 109.8 169.8 164.8
   Expectations 99.1 107.9 111.9 97.6 95.2 100.6 107.0
Jobs Gap (%) 34.6 21.6 10.2 -12.7 6.8 33.2 27.6
   Jobs Plentiful (%) 46.8 36.3 27.5 16.5 27.8 45.8 42.0
   Jobs Hard to Get (%) 12.2 14.7 17.3 29.2 21.0 12.6 14.4
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