Americans’ attitudes toward the economy improved in May, with the Conference Board’s Consumer Confidence Index climbing to 102, up from 97.5 in April. This improvement was driven by better perceptions of the job market, with Americans of all age groups feeling more positive about the economy. Despite consumers’ assessment of current business conditions being slightly less positive, the strong labor market continued to boost their overall assessment of the present situation.
Compared to the University of Michigan’s consumer survey, the Conference Board survey focuses more on perceptions of the job market. With unemployment remaining below 4% and job openings exceeding the number of unemployed individuals, consumers are feeling optimistic. However, concerns about elevated inflation have caused consumer confidence to decline in recent months. Prices, especially for food and groceries, have had a significant impact on consumers’ view of the US economy, according to the survey.
Respondents in the survey also expressed increased optimism about the stock market, with a higher percentage expecting stock prices to increase over the year ahead. Major stock indexes have reached record highs, with the Nasdaq Composite briefly surpassing 17,000 in intraday trading. Additionally, the Federal Reserve Bank of New York released data on consumer expectations for public policies like taxes, unemployment benefits, and housing assistance. While more Americans saw improved prospects for an increase in the federal minimum wage and higher welfare and unemployment benefits, there was heightened pessimism about housing assistance and affordable housing.
Despite concerns about increasing home prices, consumers were more optimistic about tax benefits for homeowners. The average likelihood of a higher mortgage interest tax deduction reached a record high of 24.8%, the highest reading for this New York Fed series. This optimism is in contrast to the increased pessimism around housing assistance and affordable housing, with the average likelihood of reduced housing assistance reaching 15%, the highest since December 2019. Overall, the data suggests a mixed outlook among consumers regarding various aspects of the economy and public policies.
In summary, May saw an improvement in Americans’ attitudes toward the economy, driven by positive perceptions of the job market. While concerns about inflation persist, consumer confidence has rebounded after three consecutive months of decline. The survey also highlighted increased optimism about the stock market and varying views on public policies like taxes, unemployment benefits, and housing assistance. Despite the mixed outlook, there are signs of positivity and resilience among American consumers as they navigate economic challenges and uncertainties.
