Consumer Confidence Slips in May as Inflation Concern Mellows Slightly

Summary

Consumer confidence fell in May, though not as much as expected. Inflation expectations edged lower for a second straight month, but so too did consumers’ assessment of the labor market. High frequency data show consumer activity picking up, which is consistent with last week’s decent personal spending data.

Confidence Slipping

Consumer confidence slipped 2.2 points in May to 106.4 from an upwardly revised 108.6 in April. The consensus had been braced for a larger decline so the outcome was somewhat better than expected. Financial markets in recent weeks have been preoccupied with whether the Federal Reserve’s plan to raise rates will derail the economy. To that end, every piece of data becomes a new brick to build upon this wall of worry. The psyche of the consumer has been moving in the wrong direction, on trend, for the better part of the past year. The separately reported consumer-sentiment index from University of Michigan dropped in May to a decade low amid ongoing worries about inflation. The comparatively smaller decline in the Conference Board’s measure of consumer sentiment has to do with the strength of the labor market, something that plays a larger role in this survey. READ FULL ARTICLE>>