U.S. consumer confidence stabilizes: Conference Board
WASHINGTON U.S. consumer confidence nudged up in May, suggesting the worst of the coronavirus-driven economic slump was likely in the past as the country starts to reopen. But it could take a while for the economy to dig out of its hole amid record unemployment.
Signs the downturn could be close to bottoming were bolstered by other data Tuesday showing the pace of decline in manufacturing activity in Texas and services industry contraction in the mid-Atlantic region easing this month.
“The worst may be over for the economy,” said Chris Rupkey, chief economist at MUFG in New York. “We still can’t see a V-shaped recovery, but at least this is looking like the shortest recession in history, which will be measured in months not years.”
The Conference Board said its consumer confidence index edged up to a reading of 86.6 this month from a downwardly revised 85.7 in April. Economists polled by Reuters had forecast the index rising to 87.5 in May from the previously reported reading of 86.9 in April.
Businesses across the U.S. are reopening after shuttering in midMarch as states and local governments took drastic measures to slow the spread of COVID-19, the respiratory illness caused by the virus, almost grounding the country to a halt. The economy contracted at its deepest pace in the first quarter since the Great Recession in 2007 and lost at least 21.4 million jobs in March and April.
Recessions in the United States are called by the National Bureau of Economic Research, which does not define a recession as two consecutive quarters of decline in real gross domestic product, as is the rule of thumb in many countries. Instead, the bureau looks for a drop in economic activity, spread across the economy and lasting more than a few months. Economists
believe the economy slipped into recession in March.
The Conference Board survey’s present situation measure, based on consumers’ assessment of current business and labour market conditions, fell to a reading of 71.1 this month from 73.0 in April. This gauge has declined by nearly 100 points in the last couple of months, underscoring the impact of COVID-19.
But the expectations index based on consumers’ short-term outlook for income, business and labour market conditions climbed to 96.9 from a reading of 94.3 in April.
Despite the improvement in expectations, households remained worried about their finances. They also anticipated higher inflation, which could lead to perceptions of reduced purchasing power and hurt much-needed consumer spending.
The Conference Board’s socalled labour market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, improved to a reading of -10.4 in May from -15.7 in April. That measure correlates to the unemployment rate in the labour department’s report.