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Economy in Brief

U.S. Consumer Confidence Backpedals To Six-Month Low
by Tom Moeller   May 31, 2011

Concern about future business conditions is the big worry on consumers' minds this month. The Conference Board reported that its May consumer confidence index fell 7.9% from April to 60.8, the lowest level since November. The latest decline followed an upwardly-revised 3.4% April increase and it contrasted with Consensus expectations for a reading of 66.5. During the last ten years there has been a 48% correlation between the level of confidence and the three-month change in real personal consumption expenditures.

The expectations component of confidence fell a sharp 9.6% from April to the lowest level since October. Expectations for improved business conditions and employment in six months plummeted to the lowest levels since October. Income expectations fell as well. Consumers expected the inflation rate in twelve months to be an increased 6.6%. Interest rates in twelve months were expected to be higher by a stable 56.6% of respondents while just 13.7% expected rates to fall. An increased 35.0% of respondents expected stock prices to rise but that still was down from 37.9% in January.

The present situations component of the consumer confidence index slipped 2.2% after a 7.2% April increase. Jobs were seen as hard to get by an improved 43.9% of respondents, though that remained down from the November high of 48.8%. Business conditions were seen as good by a roughly stable 14.6% of respondents, double the February 2010 low.

The Conference Board data can be found in Haver's CBDB database. The expectation figure is the AS1REPNA database.

Conference Board (SA, 1985=100) May Apr Mar Y/Y % 2010 2009 2008
Consumer Confidence Index 60.8 66.0 63.8 -3.0 54.5 45.2 57.9
 Present Situation 39.3 40.2 37.5 31.9 25.7 24.0 69.9
 Expectations 75.2 83.2 81.3 -11.1 73.7 59.3 50.0
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