Look at how job losses are affecting people’s behavior.
May 27 (King World News) – Peter Boockvar: The May Conference Board’s Consumer Confidence index rebounded to 98 from 85.7 and was 11 pts above expectations.
Almost all of the improvement was seen from the Expectations component which jumped to 72.8 from 55.4
… while the Present Situation rose more modestly to 135.9 from 131.1. For perspective, this overall index stood at 109.6 in October 2024, 100.1 in February 2025. After rising by 100 bps in April to 7%, one yr inflation expectations slipped back by 50 bps to a still very elevated 6.5%.
The answers to the current state of the labor market questions were mixed. Those that said jobs were Plentiful was up by .6 pts to 31.8 but fell by 2.4 pts last month. Those that said jobs were Hard to Get was up another 1.1 pts to 18.6 and that matches the most since March 2021.
Where the boost in the expectations side of confidence really was reflected was in the labor market outlook for the coming 6 months. Those expecting ‘More Jobs’ popped by 5.3 pts to a 5 month high and there was a fall in those expecting ‘fewer jobs.’ Income expectations improved too.
Spending intentions for all major goods categories were higher after the recent weakness. Vehicle buying plans rose 1.5 pts to a 5 month high and gained too for buying a home and major appliances. Spending on services rose also as “Dining out remained number one among spending intentions, followed by streaming services, while plans to spend on movies, theater, live entertainment, and sporting events increased the most over last month.”
In Terms Of Demographics
In terms of demographics, confidence rose for all income and age groups m/o/m. Politically, “It was also shared across all political affiliations, with the strongest improvements among Republicans.”
Not surprisingly, the pause in the most extreme tariff outcomes helped to lift confidence. The Conference Board said, “The rebound was already visible before the May 12 US-China trade deal but gained momentum afterwards.”
The higher stock market helped the mood too. “With the stock market continuing to recover in May, consumers’ outlook on stock prices improved, with 44% expecting stock prices to increase over the next 12 months (up from 37.6% in April).” This really gained after the May 12 tariff de-escalation with China said the Conference Board.
Consumers Changing Behavior
There were a few special questions asked. One was if consumers “changed their spending and financial behavior recently.” The response, “More than a third (36.7%) said they put money aside for future spending. Around a quarter of consumers dug into their savings to pay for goods and services (26.6%) and postponed major purchases (26%). However, there were notable differences between income groups: Consumers in households making over $125K were more likely to say that they saved money while less wealthy households were more likely to have dug into their savings or postponed purchases. In addition, only 19% indicated having advanced purchases ahead of tariffs, but that share was higher for consumers in wealthier households (26%).”
This too, “This month’s survey also asked consumers how worried they were about being laid off, not being able to afford necessities, and not being able to afford desired goods and services. Overall, they were more anxious about affordability than job security: Nearly half of consumers said they were concerned about not being able to buy the things they need or want, compared to less than a quarter worried about losing their jobs.”
Nothing market moving here but it’s clear that consumers have a close eye on the direction and level of tariffs and how that will impact their life.
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