Consumer confidence in the U.S. surged in May, reversing a five-month downward trend. The Conference Board Consumer Confidence Index rose to 98.0, up significantly from April’s 85.7. The boost was primarily fueled by a significant increase in consumer expectations for future economic conditions, which grew by over 17 points. However, the Expectations Index remains below the recession risk threshold of 80.
The Present Situation Index, which reflects views on current business and labor conditions, also improved, although consumers remain cautious about the job market. While assessments of business conditions were more favorable, concerns about job availability have persisted, with a slight increase in the percentage of consumers saying jobs are hard to get.
The rebound was widespread, spanning all age and income groups, with the strongest gains seen after the announcement of a partial pause on tariffs from China on May 12. The move appeared to calm some concerns, though many consumers remain wary about the broader impact of tariffs and inflation on the economy.
Spending intentions increased across several categories, including homes, cars, vacations, and entertainment. Expectations for stock prices also improved, aligning with the ongoing market recovery. Inflation expectations eased slightly, and fewer consumers predicted a recession within the next year.
Financial behavior showed mixed trends: higher-income households were more likely to save, while lower-income groups reported drawing from savings or delaying large purchases. Despite growing optimism, affordability concerns still outweigh job security fears, with nearly half of consumers worried about covering basic or desired expenses.
Source: The Conference Board