Consumer Confidence: Sharp Gains

Bottom Line: Consumers' assessments of the present situation and expectations for the future rose sharply for the second straight month sending the overall confidence index back to levels not seen since November. Consumers' assessment of the present situation rose particularly sharply, sending that component back into an uptrend. That said, while consumers' expectations for business conditions and employment were higher, their sentiment for income prospects was mixed. Overall this report bodes well for consumer spending going forward, suggesting that retail sales should rebound and remain at a 2-3% real trend rate amid some volatility. Consumer Confidence ROSE by 4.9 points in May to 134.1, compared with market expectations for an increase to 130.0. The index is now 4.1% ABOVE its year ago level. Present Situation Index ROSE by 6.2 points to 175.2. The index is 8.7% ABOVE its year ago level. The Expectations Index ROSE by 3.9 points to 106.6. The index is 0.6% BELOW its year ago level. The labor differential, the percentage of respondents who said jobs are “hard to get” from the percentage who said jobs are “plentiful” , moved lower by 72.5 points to -39.0.