WASHINGTON —The Conference Board’s Consumer Confidence Index decreased in May to 106.4 from 108.6 in April (1985=100) due to concerns about inflation, interest rate increases and a darker view of future economic expectations and job prospects.
Inflation is top of mind for President Biden, who laid out his plans for fighting inflation in an op-ed published in The Wall Street Journal on Monday.
What do these surveys mean for the next quarter’s sales? All indicators point to a slowdown in consumer’s desire to purchase big-ticket items. “Purchasing intentions for cars, homes, major appliances and more all cooled — likely a reflection of rising interest rates and consumers pivoting from big-ticket items to spending on services. Vacation plans have also softened due to rising prices,” said Lynn Franco, senior director of economic indicators at The Conference Board.
“Overall, the Present Situation Index remains at strong levels, suggesting growth did not contract further in Q2. That said, with the Expectations Index weakening further, consumers also do not foresee the economy picking up steam in the months ahead,” said Franco.
The Present Situation Index — based on consumers’ assessment of current business and labor market conditions — declined to 149.6 from 152.9 last month. The Expectations Index — based on consumers’ short-term outlook for income, business and labor market conditions — declined to 77.5 from 79.0.
“Looking ahead, expect surging prices and additional interest rate hikes to pose continued downside risks to consumer spending this year,” according to Franco.
The monthly Consumer Confidence Survey, based on an online sample, is conducted for The Conference Board by technology company Toluna. The cutoff date for the preliminary results was May 23.