Americans are still feeling pretty good about the current state of the United States economy, but less so about its short-term outlook.
The latest survey by The Conference Board showed its Consumer Confidence Index ticked down slightly to 117.2 in May from April’s coronavirus pandemic high of 117.5.
The Present Situation Index, which measures consumers’ assessments of current business and labour market conditions, spiked to 144.3 this month, from 131.9 in April.
But the Expectations Index, which gauges attitudes towards the short-term outlook for jobs, incomes and businesses, fell to 99.1 in May, from 107.9 the month before.
“Consumers’ assessment of present-day conditions improved, suggesting economic growth remains robust in Q2,” said Lynn Franco, senior director of economic indicators at The Conference Board. “However, consumers’ short-term optimism retreated, prompted by expectations of decelerating growth and softening labour market conditions in the months ahead.”
Consumers were less enthused in May about their income prospects – a development that Franco said could reflect rising inflation expectations as well as the waning effects of $1,400 government stimulus cheques most Americans received earlier this year.
Consumer confidence is a key component of US economic health because consumer spending drives some two-thirds of growth – and the more upbeat Americans feel about their job prospects and the overall economy, the more likely they are to splash out for goods and services.
The US economy grew at an annual rate of 6.4 percent in the first three months of this year, as accelerating coronavirus vaccinations, pandemic restriction rollbacks and generous coronavirus relief aid from the government reinvigorated consumers.
The latest reading from the Atlanta Federal Reserve’s GDPNow tracker sees the US economy growing at an annual rate of 10.1 percent in the second quarter.