By MATT OTT
AP Business Writer
SILVER SPRING, Maryland (AP) –
US consumer confidence fell slightly in May as Americans’ views on their current and future prospects faded amid persistent inflation.
The Conference Board said on Tuesday that its consumer confidence index fell to 106.4 in May – still a good reading – from 108.6 in April.
The business research group’s Current Situation Index, which measures consumers’ assessment of current business and working conditions, also fell in May to 149.6 from 152.9 in April.
The expectations index, based on consumers’ six-month outlook for income, business and labor market conditions, also fell in May, to 77.5 from 79 in April. It was above 80 in February and remains a low point in the survey.
President Joe Biden will meet with Federal Reserve Chairman Jerome Powell on Tuesday as soaring inflation continues to eat away at Americans’ incomes.
Tuesday’s meeting will be the first since Biden reappointed Powell as head of the central bank and weeks after the Senate confirmed a second term. The White House said the couple would discuss the state of the US and global economy and in particular the four-decade high inflation, described as Biden’s “top economic priority”.
The Federal Reserve raised its key interest rate by half a point in early May, the main mechanism for fighting inflation. Multiple rate hikes, with the possibility of increases of more than half a point, are expected this year.
Inflation has soared over the past year at its fastest pace in more than 40 years, with rising costs for just about everything offsetting wage increases for Americans.
The Labor Department reported earlier in May that consumer prices jumped 8.3% last month from a year ago. This figure was lower than the 8.5% year-on-year rise in March, which was the highest since 1981. On a monthly basis, prices rose 0.3% from March to April, the smallest increase in eight months.
U.S. producer prices climbed 11% in April from a year earlier, a sizable gain that indicates high inflation will continue to burden consumers and businesses in the months ahead.
Consumers were again slightly less optimistic about the job market, even as US employers added at least 400,000 jobs for 12 straight months, pushing the unemployment rate down to 3.6%. That’s the lowest rate since the pandemic erupted two years ago and just above the half-century low of 3.5% hit two years ago.
Purchase intentions for big-ticket items — cars, homes and major appliances — all fell slightly, the Conference Board said. Rising costs remain consumers’ top concern, as their inflation expectations remained virtually unchanged from April’s high levels.
“Looking ahead, expect soaring prices and further interest rate hikes to pose continued downside risks to consumer spending this year,” said Lynn Franco, senior director of economic indicators. of the Conference Board.