Gas prices and worries about war-related inflation caused consumer confidence to fall in May.
The latest edition of The Conference Board’s Consumer Confidence Index showed that confidence dipped 0.7 points to 93.1 this month, down from an upwardly revised 93.8 in April, according to a Tuesday (May 26) press release.
The Present Situation Index, a measure of consumers’ assessment of current business and labor market conditions, fell by 3.2 points to 121.2, the release said. The Expectations Index, which is based on consumers’ short-term outlook for income, business and labor market conditions, climbed by 1 point to 74.4.
“Consumer confidence edged downward in May as the inflationary impacts of the war in the Middle East intensified,” The Conference Board Chief Economist Dana M. Peterson said in the release. “Consumer appraisals of current business conditions and the current labor market were moderately less positive compared to last month. This was somewhat offset by modest improvements in consumers’ expectations for business conditions and the labor market six months from now. Meanwhile, income expectations eased in May, as those anticipating less income rose.”
The concerns related to the war in the Middle East also caused the University of Michigan’s Index of Consumer Sentiment to fall to its worst reading on record this month. The previous record low had been achieved in April, also due to gas price worries. The national average gas price Tuesday was $4.49 per gallon, according to AAA.
The Conference Board said in its Tuesday release that consumers’ write-in responses on factors influencing the economy have continued to “skew towards pessimism” this month.
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“References to prices and oil and gas increased in frequency for a second consecutive month, while mentions of war, geopolitics and conflict remained elevated, likely signaling consumers’ underlying concerns about the inflationary impacts of the war in the Middle East on their wallets,” the release said.
PYMNTS reported Tuesday that more than a third of adults in the United States “were in active financial retreat as of April,” according to a May PYMNTS Intelligence report, “Inside the Cutback Economy: How Age, Behavior and Financial Pressure Shape Consumer Spending,”
At the same time, spending adjustments were increasingly based around reducing everyday expenses, holding off on larger purchases and focusing budgets toward obligations instead of discretionary categories.
