Consumer confidence posted a slight miss for May on the Conference Board’s gauge, perhaps underscoring the inflation fears evident in the preliminary read on the University of Michigan survey.
At 117.2, the headline index missed the median estimate (118.8). 2021’s data was revised. The revisions are reflected in the figure (below).
“After rebounding sharply in recent months, US consumer confidence was essentially unchanged in May,” Lynn Franco, Senior Director of Economic Indicators at The Conference Board, said.
Consumers’ outlook was bolstered earlier this year by stimulus expectations and, of course, stimulus itself, as checks from Janet Yellen showed up in bank accounts and mailboxes.
Over the past month, though, inflation concerns dominated headlines and signs of gridlock inside the Beltway have perhaps eroded faith in the idea that a truly transformational infrastructure plan is forthcoming. Joe Biden’s companion proposal to remake the economy and remedy the myriad societal inequities plaguing the country remains contentious.
“Consumers’ assessment of present-day conditions improved, suggesting economic growth remains robust in Q2 [but] consumers’ short-term optimism retreated, prompted by expectations of decelerating growth and softening labor market conditions in the months ahead,” Franco went on to say Tuesday, adding that “consumers were also less upbeat this month about their income prospects—a reflection, perhaps, of both rising inflation expectations and a waning of further government support until expanded Child Tax Credit payments begin reaching parents in July.”
Notably, both the consumer mood and sentiment on Wall Street appear to be moderating simultaneously (figure below).
Still, things are holding up in a general sense. There’s no sign of panic among consumers and stocks aren’t far from hitting new records.
And never forget: Too much of a good thing can be bad for financial assets if it’s seen accelerating the discussion around Fed tightening. You know the story. We all do.
Summing up, the Conference Board’s Franco said that “overall, consumers remain optimistic, and confidence should remain resilient in the short term, as vaccination rates climb, COVID-19 cases decline further, and the economy fully reopens.”
