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Economy in Brief

U.S. Consumer Confidence Posts Surprising Improvement
by Tom Moeller  May 28, 2019

The Conference Board reported that its Consumer Confidence Index increased 3.8% (4.1% y/y) to 134.1 during May. The gain repeated its April improvement to an unrevised 129.2 and exceeded expectations for an increase to 130.0 in the Action Economics Forecast Survey. During the past ten years, there has been a 59% correlation between the level of consumer confidence and the year-on-year change in monthly real consumer spending.

Improvement in the reading of the present situation of 3.7% (8.7% y/y) to 175.2 mimicked its April rise. It was the highest level of the present situating index since December 2000. The expectations series rose 3.8% (-0.6% y/y) to 106.6 after a 4.5% April rise. It was the highest reading in six months.

The percentage of respondents who believed that business conditions were good rose modestly to 38.8%, but remained below the high of 42.0% last November. The percentage of respondents who believed jobs were plentiful jumped to  47.2%, the most in roughly eighteen-years. Jobs were viewed as hard to get by a lessened 10.9%, another eighteen-year low.

On the expectations front, a higher 21.9% of respondents felt that business condition would improve, the most in six months. A moderately higher 19.2% thought that there would be more jobs in six months, and a lessened 12.5% believed there would be fewer jobs. A greatly improved 22.6% felt that income would increase over the coming six months. That was the most since November, but still below the high of 25.4% last August.

Expectations for the y/y increase in the CPI eased to 4.4% and remained below the high of 5.0% in July. Respondents expecting interest rates to rise measured 55.4%, up slightly m/m but down from the 73.2% October high.

The 1.5% of respondents who planned to buy a new home was double the percentage low in March 2018, but still below this cycle's high of 1.7% registered in July 2017. The percentage who planned to buy a major appliance also rebounded to a six-month high of 52.6% following a sharp April decline.

By age group, the m/m change in confidence was mixed this month. For those under age 35, the confidence reading deteriorated sharply to the lowest level in three years. Offsetting this decline was improvement elsewhere. Confidence in the 35-54 year old age bracket rose to the highest level since November. Confidence amongst individuals over age 55 also surged to a six-month high and was near the 2000 peak.

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 Y/Y % 2018 2017 2016
Consumer Confidence Index 134.1 129.2 124.2 4.1 130.1 120.5 99.8
   Present Situation 175.2 169.0 163.0 8.7 164.8 144.8 120.3
   Expectations 106.6 102.7 98.3 -0.6 107.0 104.3 86.1
Consumer Confidence By Age Group
   Under 35 Years 120.3 145.0 130.1 -7.0 133.7 130.2 122.4
   Aged 35-54 Years 137.9 133.1 124.9 3.7 132.2 123.5 106.2
   Over 55 Years 134.9 119.8 122.0 8.4 126.3 112.9 84.6
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