The Conference Board, a global, independent business membership and research association working in the public interest, shows that consumer confidence decreased in May for the second month in a row from 94.7 to 92.6, its lowest level in six months, according to the board’s Consumer Confidence Survey.
That being said, other data seems to conflict with these lows. The University of Michigan’s consumer-sentiment index was 94.7 on Friday, according an article by Ben Leubsdorf for The Wall Street Journal. That is up significantly from April’s score of 89, then an 11-month high.
And speaking on conflicting data, consumer spending just posted its greatest increase in six year, according to this CNBC article.
“The net result is no clear direction,” stated Jim O’Sullivan chief U.S. economist at High Frequency Economics, in a note to clients.
From the article:
An array of recent indicators has pointed to sturdier economic growth in the second quarter, bolstered by a pickup in consumer spending.
Household outlays climbed 1% in April from the prior month, the Commerce Department reported Tuesday, the largest one-month jump since August 2009. Forecasting firm Macroeconomic Advisers on Tuesday estimated gross domestic product would grow at a 2.5% annual rate in the current quarter, up from the first quarter’s 0.8% growth pace.
Tuesday’s report from the Conference Board, however, offered a subdued portrait of U.S. consumers’ confidence and spending plans in the coming months.
The Present Situation Index decreased from 117.1 to 112.9 and the Expectations Index decreased from 79.7 to 79 in May, according to the survey.
"Consumer confidence declined slightly in May, primarily due to consumers rating current conditions less favorably than in April," said Lynn Franco, The Conference Board director of economic indicators.
"Expectations declined further, as consumers remain cautious about the outlook for business and labor market conditions,” Franco said. “Thus, they continue to expect little change in economic activity in the months ahead."
Although consumer confidence may be on the decline, some experts do not believe it will affect growth potential.
“We will continue to watch how expectations evolve in the coming months, but the trend to date has not precipitated any slowing in actual consumption growth,” Barclays economist Jesse Hurwitz said in a note to clients, according to the WSJ article.