US consumer confidence fell to a six-month low as views about the current state of the labor market and the outlook for business conditions slipped ahead of a deal to raise the debt ceiling.
The Conference Board’s index declined to 102.3 in May from a upwardly revised 103.7 in the prior month, data out Tuesday showed. The share of consumers who said jobs were “plentiful” fell to the lowest level in more than two years.
The confidence gauge remains well below pre-pandemic levels and highlights the growing uncertainty about the economy. The share of respondents expecting more employment opportunities in the coming six months fell to the lowest since 2016, and the labor market has been the lynchpin supporting household spending.
The group’s gauge of current conditions decreased to 148.6, the lowest level this year. A measure of expectations — which reflects consumers’ six-month outlook — edged down, reflecting the smallest share of respondents since 2011 expecting better business conditions.
Results of the survey were collected by May 22, prior to the tentative deal reached by White House and Republican negotiators to raise the debt ceiling.
“Consumer confidence declined in May as consumers’ view of current conditions became somewhat less upbeat while their expectations remained gloomy,” said Ataman Ozyildirim, senior director of economics at the Conference Board. “However, expectations for jobs and incomes over the next six months held relatively steady.”
What Bloomberg Economics Says…
“Consumers saw labor-market conditions cooling more markedly in May as waning demand for workers helps right the supply-demand imbalance… We expect conditions to ease further, reflecting a moderation in aggregate demand.”
— Eliza Winger, economist
The difference between the two measures — a metric watched closely by economists to gauge the tightness of the labor market — also dropped to the lowest level since April 2021.
Still, buying plans for cars, homes and major appliances increased, suggesting resilient household spending.
The median inflation rate seen over the next 12 months was little changed, according to the Conference Board. A government report out last week showed the Federal Reserve’s preferred core inflation metrics accelerated last month.
Separate data out last week from the University of Michigan showed consumer sentiment dropped in May as Americans grew wary of both current conditions and the outlook.
— With assistance from Chris Middleton.