NEW YORK — Economic worries and job concerns, in addition to higher gasoline prices, sent the Consumer Confidence Index down sharply this month and caused consumers’ outlook to turn grimmer.
The Conference Board Consumer Confidence Index, which rose last month, declined this month to 103.2 from an adjusted 109.8 in April. The two components of the Index also fell this month. The Present Situation Index declined to 132.5 from 136.2, while the Expectations Index registered a steep drop to 83.7 from 92.3.
“Apprehension about the short-term outlook for the economy, the labor market and consumers’ earning potential has driven the Expectations Index down to levels not seen since the aftermath of the hurricanes last summer,” said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement. “In sharp contrast, consumers continue to rate current conditions favorably, although the Present Situation Index also lost ground this month. Looking ahead, the Expectations Index bears close watching, as it is often a harbinger of times to come.”
Maury Harris, an economist at UBS, wrote in a research note that “much of the weakness in confidence can be attributed to higher gasoline prices. Retail prices averaged $2.96 a gallon in the first three weeks of May, up from $2.76, on average, during the April survey period.”
Harris added the confidence data already had signaled some slowing in consumer spending growth as weakening in the housing sector probably indirectly caused spending to slow and an increase in interest expense appeared to outweigh any strength from the labor front.
In the May survey, consumers claiming current conditions are “good” declined to 28 percent from 29.7 percent. Those who said conditions are “bad” increased to 15.4 percent from 15.1 percent. On the jobs front, those who said jobs are “plentiful” declined to 28.6 percent from 29.4 percent, while those who claimed jobs are “hard to get” inched up to 20.5 percent from 19.7 percent.
The mood in outlook for the next six months was more pessimistic. Those expecting business conditions to worsen jumped to 13.2 percent from 9.3 percent, while those expecting business conditions to improve dipped slightly to 16.5 percent from 17.3 percent.
On the jobs front, consumers weren’t as upbeat either, with those expecting more jobs to become available in the coming months decreasing to 14.6 percent from 15.4 percent last month and those expecting fewer jobs increasing to 18.2 percent from 16.3 percent.