US Consumer Confidence Falls In May

30 May 2012 11:00am - Victoria Wedderburn

US Consumer Confidence Falls In May

The Conference Board has said that its Consumer Index is down from 69.7 in April to 64.9 in May, which is the biggest drop in eight months. Confidence in the US economy fell as concerns mounted about weak jobs and slow hiring, declining home values, big drops in the stock markets and a worsening European economy. Analysts had expected the measure to reach 70 especially with gas prices falling. This figure shows that consumers need more encouraging economic signs before their worries start to ease.

The Conference Board’s director of economic indicators, Lynn Franco said, “Consumers were less positive about current business and labour market conditions, and they were more pessimistic about the short term outlook.” Franco said the data suggests that “the pace of economic growth in the months ahead may be moderate,” particularly as the consumer confidence measure has zigzagged so far this year.

Consumer confidence results are widely anticipated because consumer spending accounts for 70% of economic activity and May’s figure is significantly below the 90 reading that indicates a healthy economy. Although this measure hasn’t been near that level since December 2007, it is still significantly above the 40 reading seen last October and the all time low of 25.3 seen in February 2009.