The Conference Board Consumer Confidence Index decreased in May and now stands at 60.8 (1985=100), down from 66.0 in April. The bad news follows last week’s U.S. unemployment report that says that first time jobless claims soared to 424,000, which means that there is virtually no hiring occurring in the economy as unemployment officially hovers at 9%. The real rate of unemployment is much higher as the U.S. economy remains weak with no recovery in sight.
Consumer views of current conditions are grim. Those claiming business conditions are “good” decreased to 14.6% from 15.5%, while those claiming business conditions are “bad” increased to 37.1% from 35.9%. Consumers’ appraisal of the labor market was also less favorable than last month. Those stating jobs are “hard to get” increased to 43.9% from 42.4%, while those stating jobs are “plentiful” increased to 5.6% from 5.1%.
The latest survey does not bode well for the U.S. auto industry, which is expected to report steep May sales declines tomorrow.
May new-vehicle retail sales are projected to come in at 858,400 units, which represents a seasonally adjusted annualized rate (SAAR) of 9.6 million units, with all sales coming in at 11.9 million units, based on the first 11 selling days of the month.
This would be the lowest SAAR has since last September, and it points to a weak summer sales.
“A more pessimistic outlook is the primary reason for this month’s decline in consumer confidence. Consumers are considerably more apprehensive about future business and labor market conditions as well as their income prospects. Inflation concerns, which had eased last month, have picked up once again,” said Lynn Franco, Director of The Conference Board Consumer Research Center.