Consumer confidence falls unexpectedly in May
NEW YORK (AP) — Americans are losing faith that the economy will keep improving, according to a monthly survey.
The Conference Board's Consumer Confidence Index fell to 60.8 from a revised 66 in April, a sign of the toll that high gas prices, a choppy job outlook and a moribund housing market are taking on people's psyches. Economists had expected an increase to 67. It was the lowest reading since November.
"Consumers are considerably more apprehensive about future business and labor market conditions as well as their income prospects," said Lynn Franco, director of The Conference Board Consumer Research Center. She said fears over inflation, which eased in April, picked up again in May.
The index, released Tuesday, is still far from the reading of 90 that indicates a healthy economy. It hasn't approached that level since the recession began in December 2007.
Economists monitor confidence because consumer spending, including big-ticket items such as housing and health care, accounts for about 70 percent of U.S. economic activity and is critical for a strong rebound. A more troubled economic outlook raises the risk that people will pull back on spending.
And consumers have a lot on their minds.
Retail gasoline prices peaked at a national average of about $3.98 on May 5, according to auto club AAA, Wright Express and Oil Price Information Service. The consumer confidence survey ran from May 1-18.
The real estate market also remains depressed. Home prices fell nationwide for the eighth straight month, according to the Standard & Poor's/Case-Shiller 20-city index released Tuesday. Home prices in major areas have reached their lowest level since the U.S. housing bubble burst in 2006, stymied by foreclosures, a surplus of unsold homes and continued reluctance of Americans to buy homes.
And the job market remains sluggish. A Labor Department report last week said more people applied for unemployment benefits last week, the first increase in three weeks.
The number of Americans seeking unemployment benefits rose by 10,000 to a seasonally adjusted 424,000. That's above the 375,000 level consistent with sustainable job growth. They peaked at 659,000 during the recession.
Results from the Consumer Confidence survey have been choppy in recent months, rising in April but falling in March. But before that the measure had risen for five consecutive months and hit a three-year high in February.
Consumers' opinion about current conditions declined only slightly. Their expectations for the next six months fell more. The number of people expecting jobs to grow in the next six months declined, and the number of people expecting fewer jobs during the same period increased.