Consumer Confidence improved in May after five consecutive months of decline, increasing by 12.3 points. This was driven by a spike in future expectations of business conditions, income prospects, and the labor market. Even with a 17.4 point increase, the Future Expectations Index remains below the recession warning threshold of 80.
This increase was expected as the survey period includes the May 12th announcement of a reprieve for tariffs on imports from China. While rising Consumer Confidence is a positive signal for the economy, rapid moves in the series based on trade policy require patience as longer-term tariff levels are yet to be determined, and the ultimate effects have not been felt.
Despite an increase in the Index, financial stress remains a dark cloud looming over the consumer. Concerningly, nearly 50% of respondents said they are worried about not being able to afford the goods or services they need and over one fifth said they were worried about being laid off. The consumer is an essential part of the economy to watch as uncertainty continues to prevail.