Two-thirds of Americans say they are cutting back on spending as gas prices and food costs stay elevated
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After three straight months of improvement, the Conference Board's consumer confidence index reversed course in May, dipping 0.7 points to 93.1, as concerns about the inflationary fallout from the ongoing Middle East war dragged on Americans' assessment of current conditions.
The index fell from an upwardly revised 93.8 in April. Economists surveyed by Reuters had forecast a reading of 92.0, according to Yahoo Finance. Economists polled by The Wall Street Journal had also anticipated a reading of 92.0, according to the Journal.
The Present Situation Index, which measures consumers' assessments of current business and labor market conditions, retreated 3.2 points to 121.2, a three-month low, the Conference Board said. The Expectations Index, which captures consumers' six-month outlook for income, business, and labor conditions, rose 1.0 point to 74.4, its highest level this year, according to Bloomberg.
"Consumer confidence edged downward in May as the inflationary impacts of the war in the Middle East intensified," Dana M. Peterson, chief economist at the Conference Board, said in a statement. "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."
Respondents grew slightly less upbeat about employment: 25.5% described jobs as plentiful, down from 26.9% in April and the weakest such reading since 2021, while the proportion calling jobs hard to find slipped to 18.6% from 19.4%, the Conference Board said.
The Conference Board included a supplemental block of questions in May's survey, and the results painted a picture of widespread belt-tightening: roughly two in three participants reported pulling back on what they spend, with the most common responses being trimming the number of items purchased and postponing big-ticket buys. Looking ahead, respondents identified clothing and shoes, hobby-related products, and toys and games as categories where they expect to cut costs.
According to The Associated Press, pump prices nationally have surged to roughly $4.49 per gallon — up from $2.98 in the days before hostilities broke out in late February — hovering at or above the $4.50 mark for nearly the entire month of May. Inflation reached 3.8% in April, the fastest annual pace in three years, as energy costs tied to the conflict continued to push prices higher.
The Conference Board's May reading contrasts with an even deeper deterioration captured by a separate survey. The University of Michigan's rival sentiment gauge reached 44.8 in May, a level that has no precedent in the survey's seven-decade history and the third consecutive month the index has deteriorated. Respondents to that survey also marked up their long-run price outlook, lifting five-to-ten-year inflation expectations to 3.9% from 3.5% in April.
The Conference Board survey is conducted by Toluna and is based on an online sample. The cutoff date for the preliminary May results was May 19.
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