Consumers confidence in the United States fell slightly in May, as stubbornly high inflation and increasing interest rates prompted Americans to be more hesitant about purchasing large-ticket items such as cars and houses, potentially stifling economic development.
Consumers opinions of the labor market have shifted little this month, according to a study released by the Conference Board on Tuesday. Despite the minor dip in confidence, it indicated that the Federal Reserve’s strong monetary policy operations to restrict demand were beginning to have an effect.
Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, said, “We can never underestimate the American Consumers.” “However, the Federal Reserve would welcome proposals to reduce purchases and become a little more cautious as it seeks to temper demand.” This month, the Conference Board’s Consumers confidence index dropped to 106.4. Data for April was revised upward, with the index now reaching 108.6 instead of 107.3 as initially reported. The index is still higher than the epidemic lows.
It has done significantly better than the University of Michigan’s Consumers confidence index, which is at an 11-year low. The labor market is given more weight in the Conference Board poll. The survey’s so-called labor market differential, which is based on respondents’ perceptions of how plentiful or difficult it is to find work, decreased to 39.3 this month from 44.7 in April. This was the first time in a year that this metric, which correlates to the Labor Department’s unemployment rate, fell below 40.