U.S. Consumer Confidence Falls to 16-Year Low
The Conference Board's consumer confidence index for May fell more than expected to 57.2 in Tuesday's report, led by a 5.5-point decline in the present situation component.
The previous month's reading of 62.3 was revised upwards to 62.8. The three-month average for consumer confidence is now at 62.0, down from 68.4 last month. One year ago, the index stood at 108.5.
Following some bounce-back in the previous month, the expectations category fell to 45.7, down from 50.0 in April, and the present situation component fell 5.5 points to 74.4 in May from 81.9 a month earlier.
Consumers' appraisal of the job market was quite pessimistic in May, with those saying jobs were 'hard to get' increasing to 28.0% from 27.9% and those claiming jobs were 'plentiful' decreasing to 16.3% from 17.1%.
moved up nine-tenths to 7.7%, a record high.
Lynn Franco, director of the Conference Board's Consumer Research Center, said, "Weakening business and job conditions coupled with growing pessimism about the short-term future have further depleted consumers' confidence in the overall state of the economy."
Respondents claiming business conditions were 'bad' increased to 30.6% from 26.5% while those claiming business conditions were 'good' declined to 13.1% from 15.4%.
In the labour market, consumers expecting fewer jobs in the months ahead fell to 32.4% from 32.9%, while those anticipating more jobs fell to 8.7% from 8.8%. Meanwhile, the proportion of consumers expecting their incomes to increase declined to 13.4% from 15.5%.
"Consumers' inflation expectations, fuelled by increasing prices at the pump, are now at an all-time high and are likely to rise further in the months ahead. As for the short-term outlook, the Expectations Index suggests little likelihood of a turnaround in the immediate months ahead," Franco added.
Earlier in the month, the preliminary consumer sentiment survey from Reuters and the University of Michigan tumbled beyond the previous month's 26-year low, falling to 59.5 in May from April's 62.6. The last time the survey reached below 62.0 was in March 1982. In addition, one-year inflation expectations moved up yet again to 5.2%, up from the prior month's 4.8%.
The weekly consumer comfort survey from the Washington Post and ABC News also tumbled two points to -49 on May 27, just a single point above the all-time low of -50 reached in early 1992.
Before the economic turmoil began, the Conference Board's consumer confidence index reached an annual high of 111.9 in June 2007. The subprime crisis created a four-month decline to 87.0 in November before rebounding by a few points before the holidays. The index then resumed its downward trend in January, falling to 62.3 from 87.9 in the first four months of 2008.
By Patrick McGee and edited by Nancy Girgis