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Economy in Brief

U.S. Consumer Confidence Remains Sluggish
by Carol Stone  May 26, 2015

The Conference Board's Consumer Confidence Index increased 1.2% in May to 95.4 (+16.1% y/y) after falling to 94.3 during April, which was revised from 95.2. The latest figure was marginally better than forecasts of 94.5 in the Action Economics Survey, which would have been basically flat with the original April number. Thus, after a spurt of more optimistic readings during the winter, these two recent more sluggish readings show that confidence has retreated to just slightly better than late in 2014. During the last ten years, there has been a 45% correlation between the level of confidence and the three-month change in real personal consumption expenditures.

Consumers' read of the present situation rose 2.9% to 108.1 (+34.6% y/y), reversing much of its April decline. Their expectations, though, eased again, falling 0.2% to 86.9 (+4.1% y/y).

Views on job availability were mixed. Jobs were viewed as plentiful by 20.7% of survey respondents, up from 19.0% in April and putting that share back in its post-recession high range. However, the share of people viewing jobs as hard to get also increased in May, to 27.3%, a figure closer to its higher range that had prevailed through the end of last year. And despite the positive move in the overall confidence index, the share of people seeing business conditions as "good", eased to 25.2% from 25.5%.

For six months ahead, business conditions were expected to be better by 15.6%, just barely above April's reading and down from the August high of 20.8%. At the same time, the number looking for conditions to worsen increased from April's 9.1% to 10.8% in May. More jobs were expected by 14.6% versus the high of 18.7% nine months ago. The inflation rate was expected to recover to 5.1%, after dipping to 4.9% in April. The number planning to buy a home in the next six months rose to 5.5% after two weaker readings.

By age group, confidence rose in the two younger ranges. Those under 35 registered 116.4 in May, up 1.1% from April (+9.4% y/y and those 35-54 had a reading of 103.1, up 7.2% m/m and 16.6% y/y. Older consumers, over 55, however, had a flat reading month-on-month at 80.7 (+20.4% y/y), leaving the recent level well below the first quarter average of 90.4.

The Consumer Confidence data is available in Haver's CBDB database. The total indexes appear in USECON and the market expectations are in AS1REPNA.

Conference Board (SA, 1985=100) May Apr Mar Y/Y % 2014 2013 2012
Consumer Confidence Index 95.4 94.3 101.4 16.1 86.9 73.2 67.1
  Present Situation 108.1 105.1 109.5 34.6 87.3 67.6 49.8
  Expectations 86.9 87.1 96.0 4.1 86.6 77.0 78.6
Consumer Confidence By Age Group
  Under 35 Years 116.4 115.1 124.9 9.4 106.6 93.1 86.5
  Aged 35-54 Years 103.1 96.2 104.8 16.6 92.4 76.8 68.5
  Over 55 Years 80.7 80.7 89.7 20.4 73.8 61.2 56.7
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