Consumer confidence stabilizes in May

The Conference Board Consumer Confidence Index, which had shown a significant decline in April, stabilized in May as spring finally arrived in the Northeast.

Consumers make up the largest component of U.S. gross domestic product, lending a degree of significance to any discernable uptick in confidence. That said, we think that the numbers, in and of themselves, are not enough to shine an unabashedly positive light on consumer behavior in the coming quarters, particularly because sentiment on both ends of the spectrum continues moving toward the middle. In other words: the number of respondents saying business conditions are “good” edged down slightly, but those saying business conditions are “bad” also decreased. Likewise, the proportion of individuals who thought that jobs were plentiful went up 170 basis points,* very nearly the same as the increase in the number who thought that jobs were hard to get.

Overall, we believe the consumer confidence readings for May were encouraging, and the data indeed show a stabilization of the lackluster results seen in February, March, and April. Nonetheless, the picture for the future remains murky. For example, the short-term outlook reflected in the Expectations Index, a subset of the broader consumer confidence numbers, shows a slight softening, with the increase in respondents expecting business conditions to worsen outnumbering those who expect conditions to improve.


*One basis point equals one one-hundredth of a percentage point.

The views expressed represent the Manager’s assessment of the market environment as of May 28, 2015, and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice. Views are subject to change without notice and may not reflect the Manager's views.

The Conference Board Consumer Confidence Index measures the health of the U.S. economy based on survey responses from households across the country. Survey respondents rate their current perceptions of business and employment conditions. They also rate their future expectations for business conditions, employment conditions, and family income. This latter set of survey responses comprise what is known separately as the Expectations Index, which measures respondents’ expectations for conditions in six months’ time.

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