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Economy in Brief

U.S. Consumer Confidence Continues Lower
by Tom Moeller  May 31, 2016

The Conference Board's Consumer Confidence Index during May declined 2.2% (-2.1% y/y) to 92.6 following a 1.5% April decrease to 94.7, revised from 94.2. The latest figure was the lowest in six months and disappointed expectations for 96.0 in the Action Economics Forecast Survey. During the last ten years, there has been a 70% correlation between the level of confidence and the y/y change in real consumer spending.

The present situations reading declined 3.6% (+5.4% y/y) to 112.9, the lowest figure in six months. The expectations figure eased 0.9% (-8.4% y/y) to 79.0, down 18.6% from the January 2015 high.

The present situation decline reflected a jump in the perception that business conditions were bad. It also reflected little-change in the perception that jobs were plentiful. Nevertheless, jobs were viewed as hard to get by slightly more respondents, a reading that has been moving sideways all year. The expectations figure eased due a rise in perception that business conditions would worsen. Expectations that there would be fewer jobs firmed to the highest point in six months, and an elevated percentage thought that income would decrease.

Expectations for the inflation rate increased m/m to 4.9%, the highest level since December and up from the 4.7% low three months ago. Higher interest rates were expected by 60.5% of respondents, and that remained down sharply versus 72.6% in January.

Plans to buy a new home held steady m/m, but they were down sharply from January. Major appliance buying plans deteriorated slightly. Intentions to buy a new car shot up.

By age group, confidence amongst respondents under age 35 deteriorated to the lowest level in six months. Confidence amongst those aged 35-54 years held steady m/m at a level that was down sharply from the September high. Confidence amongst respondents over age 55 eased to the lowest point since September 2014.

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 % 2015 2014 2013
Consumer Confidence Index 92.6 94.7 96.1 -2.1 98.0 86.9 73.2
  Present Situation 112.9 117.1 114.9 5.4 111.7 87.4 67.6
  Expectations 79.0 79.7 83.6 -8.4 88.8 86.6 77.0
Consumer Confidence By Age Group
  Under 35 Years 110.1 121.3 123.6 -6.1 116.0 106.6 93.1
  Aged 35-54 Years 99.0 99.1 101.4 -1.1 103.9 92.4 76.8
  Over 55 Years 77.8 81.8 80.1 -4.8 84.0 73.8 61.2
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