Consumer confidence index drops to 106.4 in May from 108.6
The numbers: A survey of U.S. consumer confidence fell slightly in May to a three-month low of 106.4, reflecting worries about high inflation and a slowdown in the economy.
Economists polled by The Wall Street Journal had forecast the index to total 103.9.
The index was revised up to 108.6 in April.
Big picture: The U.S. economy is still growing, but government spending has tapered off and high inflation is forcing the Federal Reserve to jack up interest rates. Higher rates could eventually slow the economy.
On the flip side, the strongest labor market in decades and rising wages have offset some of the damage from high inflation and allowed consumers to keep spending. Consumer spending is the main driver of the U.S. economy.
Key details: A measure of how consumers feel about the economy right now slipped to 149.6 from 152.9, The Conference Board said Tuesday. Some saw the jobs market as not being quite as strong as it was a few months ago,
Americans also have fewer plans to buy cars, homes, appliances and other big-ticket items because of high costs. Yet they have shifted some of that spending to services like dining out, going to a ball game and traveling.
A similar confidence gauge that looks ahead six months fell to 77.5 from 79.
Consumers don’t “foresee the economy picking up steam in the months ahead,” said Lynn Franco, senior director of economic indicators at the board. “Inflation remains top of mind for consumers.”
Looking ahead: “For all of the worrying about consumer attitudes, spending has been robust over the past few months and will likely be very strong through the summer,” said chief economist Stephen Stanley of Amherst Pierpont Securities, “as households make up for lost time by traveling, vacationing, getting out and about, and generally enjoying themselves after two years of pandemic-induced social distancing.”
Market reaction: The Dow Jones Industrial Average DJIA, -0.67% and S&P 500 SPX, -0.63% fell in Tuesday trades. Stocks rallied last year after the Fed indicated it might not raise interest rates as quickly as investors had expected.