NEW YORK — Consumer confidence rebounded in May, exceeding forecasts and reaching the highest level since March, but experts said rising gasoline prices are a reason for caution.
The Consumer Confidence Index of the New York-based Conference Board increased to 108 from a revised 106.3 last month, a five-month low. The index stood at 108.2 in March. The consensus expectation among economists was for an index of 105. Despite gas prices and a cooled housing market, the May index report got boosts from the Present Situation Index, which rose to 136.1 from 133.5 last month, and the Expectations Index, which gained to 89.2 from 88.2.
"The Expectations Index appears consistent with about a 3 percent trend in real consumer spending growth,'' UBS economist Maury Harris wrote in a research note. "However, a cautious spending outlook is suggested by a special question [in the survey] on consumer spending plans in response to higher gasoline and energy prices. Fifty-one percent of respondents plan on cutting back on their driving this summer; 43 percent plan on cutting back vacation; 39 percent plan on cutting back the use of their air-conditioning/fans, and 60 percent plan on cutting back on other spending in general.''
Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement: "The bounce-back in confidence was due primarily to a more upbeat assessment of present-day business conditions. Consumers' view of the job market, both present and six months from now, was little changed and did not provide a boost in confidence. The short-term outlook remains cautious, and rising gasoline prices are having a negative impact on consumers' inflation expectations."
Consumers who said conditions were "good" rose to 29.4 percent from 27.5 percent, while those saying conditions were "bad" was unchanged at 14.5 percent. Consumers were also more neutral about the labor market, with respondents saying jobs are "hard to get" dipping to 19.9 percent from 20.3 percent and those saying jobs are "plentiful" remaining at 29 percent.
Consumers who expected conditions to improve during the next six months rose to 15.1 percent from 13.8 percent last month, while respondents who expected business conditions to worsen inched up to 10.1 percent from 9.7 percent.
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