| Consumer Confidence | Back |
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Released On 5/27/2011 10:00:00 AM For May, 2011
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Prior | Prior Revised | Consensus | Consensus Range | Actual |
| Consumer Confidence - Level | 65.4 | 61.7 | 66.5 | 57.0 to 71.0 | 60.8 |
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Highlights
Pessimism is deepening according to the consumer confidence index which at 60.8 in May, for a more than five point loss from April, is at a six-month low, a period of time that includes the spike in oil prices and the Japanese earthquake (prior month revised to 66.0). Weakness is centered where it's not wanted, in the expectations component which is at a seven-month low. Expectations show deterioration for business conditions, for employment and very notably for income where more consumers suddenly see a decrease ahead vs an increase.
The assessment of the present situation also weakened with more saying, at 43.9 percent for a 1-1/2 percentage point change, that jobs are hard to get. This reading cuts deeply into April's solid two percentage point improvement and offers an early negative indication for Friday's monthly jobs report.
A prior easing in the rate of gas and food inflation had bolstered this report in April but a downturn in pump prices during May is not convincing consumers that inflation is on the downtrend. One-year inflation expectations rose three tenths to a very severe 6.6 percent that compares with 6.7 percent during the shocks of March.
This report contrasts sharply with last week's consumer sentiment data that showed significant improvement during May. Taken together, the two reports suggest no better than mixed spirits, a conclusion supported by two weeks of comments from retailers who are reporting new weakness at the low end vs rising strength at the high end.
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Market Consensus before announcement
The Conference Board's consumer confidence index rose 1.6 points in April to 65.4. Outside of February's 72.0, April was the best reading of the recovery. Improved optimism of the jobs market was the reason for the gain. A big headline was a 2.6 percentage point drop in those saying jobs are currently hard to get to 41.8 percent. This was the lowest reading in more than two years. Apparently, consumers are seeing improvement in the economy as more anticipate their income increasing six months out, 16.7 percent versus 15.2 in March. Looking ahead, there could be further modest improvement in confidence as gasoline prices have eased. However, the decline in jobless claims largely stalled for the month.
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Definition
The Conference Board compiles a survey of consumer attitudes on the economy. The headline Consumer Confidence Index is based on consumers' perceptions of current business and employment conditions, as well as their expectations for six months hence regarding business conditions, employment, and income. Three thousand households across the country are surveyed each month.
The Conference Board changed its polling company in 2010. The current polling company is Nielsen Co. with the former being TNS Inc. The switchover reference month for the new data is November 2010. Because of the change in the polling service (even though the questions in the questionnaire are the same) the data are not completely consistent and November 2010 should be considered a break in the series. In general, while the level of consumer confidence is associated with consumer spending, the two do not move in tandem each and every month. Why Investors Care
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![[Chart]](showimage.asp?imageid=20882)
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Typically retail sales will move in tandem with consumer optimism - although not necessarily each and every month.
Data Source: Haver Analytics
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