The economy and the stock market, which seem often to show a random correlation, have hit a bit of a rocky patch lately: trade wars, European elections, and so on. But U.S. consumers are bullish:
The Conference Board Consumer Confidence Index® improved in May, following an increase in April. The Index now stands at 134.1 (1985=100), up from 129.2 in April. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – increased from 169.0 to 175.2. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – increased from 102.7 last month to 106.6 this month.
“Consumer Confidence posted another gain in May and is now back to levels seen last Fall when the Index was hovering near 18-year highs,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The increase in the Present Situation Index was driven primarily by employment gains. Expectations regarding the short-term outlook for business conditions and employment improved, but consumers’ sentiment regarding their income prospects was mixed. Consumers expect the economy to continue growing at a solid pace in the short-term, and despite weak retail sales in April, these high levels of confidence suggest no significant pullback in consumer spending in the months ahead.”
The index measures consumers’ assessment of current economic conditions and their expectations for the next six months. Both improved in May. Americans’ evaluation of today’s economy hit the highest level since December 2000.
Their optimism reflects a healthy job market. The U.S. unemployment rate has dropped to 3.6%, near a 50-year low.
And, the recent BEA update shows Q1 GDP growth at 3.1 percent.