United States consumer confidence edged lower in May as Americans’ view of their present and future prospects dimmed in the midst of persistent inflation.
The Conference Board said on Tuesday that its consumer confidence index dipped to 106.4 in May — still a strong reading — from 108.6 in April.
The business research group’s present situation index, which measures consumers’ assessment of current business and labour conditions, also fell in May to 149.6 from 152.9 in April.
The expectations index, based on consumers’ six-month outlook for income, business and labour market conditions, also declined in May, to 77.5 from 79 in April. It was above 80 in February and remains a weak spot in the survey.
President Joe Biden will meet Federal Reserve Chairman Jerome Powell on Tuesday as soaring inflation continues to carve up Americans’ earnings.
The meeting will be the first since Biden renominated Powell to lead the central bank and weeks after the Senate confirmed a second term. The White House said the pair would discuss the state of the US and global economy and especially four-decade high inflation, described as Biden’s “top economic priority”.
The Federal Reserve raised its main borrowing rate by a half-point in early May, the main mechanism for combatting inflation. Multiple rate hikes, with the possibility of more half-point increases, are expected this year.
Inflation soared over the past year at its fastest pace in more than 40 years, with rising costs for just about everything negating Americans’ pay raises.
The Labor Department reported earlier in May that consumer prices jumped 8.3 percent last month from a year ago. That was below the 8.5 percent year-over-year surge in March, which was the highest since 1981. On a monthly basis, prices rose 0.3 percent from March to April, the smallest rise in eight months.
US producer prices soared 11 percent in April from a year earlier, a hefty gain that indicates high inflation will remain a burden for consumers and businesses in the months ahead.
Consumers were again slightly less optimistic about the labour market, even as US employers have added at least 400,000 jobs for 12 straight months, pushing the unemployment rate down to 3.6 percent. That is the lowest rate since the pandemic erupted two years ago and just above the half-century low of 3.5 percent that was reached two years ago.
Buying intentions for big-ticket items – cars, homes and major appliances – all cooled slightly, the Conference Board said. Rising costs remain the top concern for consumers, as their inflation expectations were mostly unchanged from April’s elevated levels.
“Looking ahead, expect surging prices and additional interest rate hikes to pose continued downside risks to consumer spending this year,” said Lynn Franco, the Conference Board’s senior director of economic indicators.