The Conference Board’s Consumer Confidence Index in May dropped to 57.2 from 62.8 last month, representing the fifth straight monthly decline and nearing its lowest level since October 1992 when the Index was at 54.6.

Société Générale’s chief U.S. economist, Stephen Gallagher, said, “The recent breakdown can be tied to many factors: housing, fuel costs and jobs.”

Gallagher said his firm has been watching for a lift in spending from the federal government’s tax rebates, but so far the “positive influence of the tax rebates is being curtailed by soaring gasoline prices.”

He concluded that, while retailers aren’t reporting any uptick in sales, there’s been no major drop-off as a result of the rise in gas prices, either.

In the current monthly survey, the results show that the Present Situation Index fell to 74.4 from 81.9, while the Expectations Index dropped to 45.7 from 50 last month.

“At 45.7, the key Expectations Index looks more than low enough to be consistent with contraction in real consumption. The low during the 2001 recession was 70.7. The low during the 1990 to ’91 recession was 55.3,” observed Maury Harris, economist at UBS.

According to Gallagher, the Present Situation component appears to be closely tied to job growth, while the Expectations Index, which he said makes up 60 percent of the overall index, seems dogged by gasoline prices.

“Weakening business and job conditions, coupled with growing pessimism about the short-term future, have further depleted consumers’ confidence in the overall state of the economy,” said Lynn Franco, director of The Conference Board Consumer Research Center. “Consumers’ inflation expectations, fueled by increasing prices at the pump, are now at an all-time high and are likely to rise further in the months ahead.”

Looking ahead, Franco said consumers’ responses to the Expectations Index component suggests “little likelihood of a turnaround in the immediate months ahead.”

Consumers who responded to the May survey were definitely more pessimistic this month than they were in April.

Those who said business conditions were “bad” rose to 30.6 percent from 26.5 percent last month. Those who believed business conditions were “good” also fell, this time to 13.1 percent from 15.4 percent.

This story first appeared in the May 28, 2008 issue of WWD. Subscribe Today.

While the percentage of respondents who said jobs were “hard to get” was essentially unchanged at 28 percent versus the 27.9 percent last month, those who believed jobs are “plentiful” fell to 16.3 percent from 17.1 percent.

Consumers were also pessimistic about the outlook over the next six months. Those who expect business conditions to worsen in the next six months jumped to 33.6 percent from 27.4 percent, while those who expect an improvement inched up slightly to 10.4 from 10.1 last month.

The Conference Board’s monthly report was disclosed on the same day that the Standard & Poor’s/Case-Shiller Index said home prices fell 14.1 percent in the first quarter compared with a year ago. The drop represents the sharpest decline during the first quarter in two decades.

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