Consumer confidence is steadily improving following two months of rapid decline mostly as a result of the coronavirus pandemic.
According to The Conference Board, the Consumer Confidence Index stands at 86.6 this month — up from 85.7 in April, as millions of Americans remained under strict lockdown to help curb the spread of COVID-19, which has infected more than 1.66 million people in the United States and led to at least 98,400 deaths.
What’s more, The Conference Board’s Expectations Index — based on consumers’ short-term outlook for income, business and labor market conditions — improved from 94.3 last month to 96.9 in May. Those who anticipated business conditions would improve over the next six months increased from 39.8% to 43.3%, while those who expected them to worsen fell from 25.1% to 21.4%.
“Short-term expectations moderately increased as the gradual reopening of the economy helped improve consumers’ spirits,” said senior director of economic indicators Lynn Franco. However, she added, “consumers remain concerned about their financial prospects.”
The report indicated that the percentage of respondents who predicted an increase in their short-term income prospects fell from 17.2% to 14.0% month over month — but the proportion that expected a decrease slid from 18.4% to 15%.
Elsewhere in the report, consumers were less bullish on some facets of the labor market. The severity of the pandemic’s impact was reflected in The Conference Board’s Present Situation Index, which takes into account consumers’ views of current business and labor market conditions. The measure, which fell from 73 in April to 71.1 this month, has plummeted nearly 100 points since the COVID-19 outbreak swept across the globe.
According to the think tank, the number of respondents who claimed that business conditions were “good” dropped from 19.9% to 16.3% while those who said they were “bad” shot up from 45.3% to 52.1%.
“Inflation expectations continue to climb, which could lead to a sense of diminished purchasing power and curtail spending,” Franco added. “While the decline in confidence appears to have stopped for the moment, the uneven path to recovery and potential second wave are likely to keep a cloud of uncertainty hanging over consumers’ heads.”