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NEW YORK -- Consumer confidence fell to a five-month low in May, according to The Conference Board's widely watched index of consumer outlook.
The Conference Board's consumer confidence index fell 3.8 points in May -- still deep in recessionary territory -- as Americans were less optimistic about current labor market and business conditions, and held a dim view of the short-term outlook.
The survey released Tuesday showed an overall index reading of 64.9, down from 68.7 in April. Economists had expected better results due to a decline in pump prices. The index has now declined three months in a row and is at the lowest level since January 2012.
Three major components of the index all fell -- the present situation index was off 5.3 points after three consecutive monthly gains; the labor index (the proportion of respondents who think jobs are hard to get) fell to its lowest level since January, and the expectations index fell 2.8 points. However, the percentage of respondents who think their income will increase six months hence increased.
Average inflation expectations one year hence fell for the second month in a row to 5.6 percent in May.
"The recent fall in pump prices has helped keep the Conference Board's consumer confidence index from falling further," said Chris G. Christopher, Jr., Senior Principal Economist, IHS Global Insight.
"In general, it seems that consumer confidence is having a very tough time getting out of recession territory," he continued. "Consumers face too many headwinds such as high debt burdens, depressed home prices, a lack of confidence in the government's ability to make things better, volatile equity markets and rising student loan balances."
As reported previously by CSNews Online, the Conference Board's consumer confidence index has been out of sync with the Reuters/University of Michigan consumer sentiment index for several months.
The consumer sentiment index has increased the past three months, while the consumer confidence index has dropped. IHS Global Insight's econometric analysis indicates that pump prices have a stronger impact on the consumer sentiment index, while labor market conditions have a stronger impact on the consumer confidence index.
The Reuters/University of Michigan consumer sentiment index improved to 79.3 in May from 76.4 in April -- its highest level since October 2007. The current conditions index bounced back to 87.2 in May from 82.9 in April. The expectations index continues to advance from 72.3 in April to 74.3 in May. Meanwhile, the survey found that consumers' short-term inflation expectations fell to 3.0 percent in May from 3.2 percent in April, while long-term inflation expectations fell to 2.7 percent from 2.9 percent in April.
The Reuters/University of Michigan consumer sentiment index paints a rosier outlook than the Conference Board's index.
"This is a good report," said another IHS Global economist, Yinbin Li. "Consumer mood is slowly coming out of the ditch. However, there are still strong headwinds facing many American households such as rising student loan debt, a poor housing market and weak wage growth."