U.S. Consumer Confidence Rebounds in May; Inflation Expectations Ease

The Conference Board's Index of Consumer Confidence increased 14.4% (-3.3% y/y) to 98.0 during May after falling 8.7% in April to 85.7, revised from down 8.4%, after falling 6.2% to 93.9 in March. A reading of 87.0 had been expected in the Action Economics Forecast Survey. The May figure remained 13.1% below its November 2024 high.

The Expectations Index recovered 31.4% this month (-2.8% y/y) after plunging 17.2% in April, revised from down 18.7%, and falling 10.6% in March. The Present Situation index rose 3.7% (-3.5% y/y) after declining 2.5% in April, revised from down 0.7%, after weakening 2.7% in March.

The percentage of respondents assessing business conditions as “good” surged to 21.9% this month after rising to 19.2% in April. The index hit a high of 22.0% in October. The percentage assessing conditions as “bad” declined to 14.0% after easing to 16.3% in April. The appraisal of labor market conditions as “jobs plentiful” improved as 31.8% of respondents, up from 31.2% in April. Jobs were viewed as hard to get by 18.6% of respondents this month, up from 17.5% in April. This measure has risen from 11.0% in January 2024. The labor market differential calculated by Haver Analytics (the percentage of consumers who think jobs are plentiful minus the percentage who believe that jobs are currently hard to get) fell to 13.2% compared to 13.7% in April and 17.5% in March. This measure remained below a high of 47.1% in March 2022. This series has a 60% correlation with the unemployment rate over the last ten years.

Expectations for business conditions recovered this month. A higher 19.7% of respondents expect conditions to improve over the next six months, after falling to 15.9% in April, while 26.7% expect them to worsen, after rising to 34.9% in April. On employment, an increased 19.2% expect the number of jobs to increase over the next six months after 13.9% in April. The percentage expecting the number of jobs to decline in the next six months fell to 26.6% after surging to 32.4% in April. An increased 18.0% of respondents expect income to increase in six months, up from 15.9% in April. That remained down from a high of 20.7% in November and compares1 to 13.8% who expect income to decrease, down from 17.7% in April.

The expected rate of price inflation over the next twelve months declined to 6.5% in May after surging to 7.0% in April. This remains up from a low of 5.0% in November. Interest rates are expected to rise this year by a slightly lessened 55.6% of respondents, but that remained up from a 45.5% November 2024 low. The percentage of respondents expecting equity prices to increase over the next twelve months rebounded to 44.0%, up from 37.6% in April and the most in three months, while the percentage expecting a decline in stock prices fell to 37.7% after jumping to 47.2% in April.

The percentage of respondents planning to buy a home surged in May to 6.6% after falling to 4.8% in April. Plans to purchase an automobile increased to 12.1% this month after falling to 10.6% from 10.7% in both March and February.

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