US Consumers Pull Back on Major Purchases

U.S. Consumer Confidence as measured by the Conference Board is beginning to slip amid stubbornly high inflation and some are beginning to show reluctance when it comes to making big purchases, according to Reuters on Tuesday (May 31).

The index stood at 106.4 for May, down slightly from April’s figure, which had represented an increase over March’s.

“The decline in the Present Situation Index was driven solely by a perceived softening in labor market conditions. By contrast, views of current business conditions—which tend to move ahead of trends in jobs — improved,” Lynn Franco, senior director of economic indicators at The Conference Board, said in a prepared statement.

Conference Board data also showed that in May consumers were showing reduced excitement about buying cars, homes and major appliances. The group attributed this to rising interest rates.

The Conference Board predicted that rising prices and interest rates will further weaken consumer demand in the coming months.

The slight pullback in consumer enthusiasm about the economy comes amid efforts by the Federal Reserve to curb consumption by effectively raising interest rates.

“We can never underestimate the U.S. consumer,” Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, reportedly told Reuters. “But plans to pull back on purchases, and become a little more cautious, is something that the Federal Reserve would welcome as it aims to cool demand.”

The Conference Board data also showed that U.S. consumers are less confident in the labor market than they have been of late. In the May survey, 51.8% of respondents said jobs were “plentiful,” down from 54.8% in April. Also in May, 12.5% of consumers said jobs were “hard to get,” up from 10.1% in April.