May’s Consumer Confidence Research Notes

by Jim Baird on May 31, 2011

Optimism wanes in light of slower growth prospects

Consumer confidence slipped markedly in May, declining to 60.8 – the index’s lowest point since November of last year.

There is an emerging skepticism again about the durability of the recovery, as data of late has suggested that growth is slowing.

Consumers are not optimistic about current business conditions, nor are they optimistic that conditions are likely to improve in the near term.

Despite stronger job creation in recent months, consumers still recognize that the labor market is lackluster and jobs are still relatively difficult to find.  It’s difficult to see any meaningful improvement in the labor market if the pace of growth stagnates further in the months ahead.

Real personal income has languished in recent quarters and the housing market appears to be in the midst of a double-dip.  With food and fuel costs pinching consumers discretionary spending, it cannot be a surprise that the collective consumer mood remains challenged.

While conditions have improved considerably in the past two years, the sub-par rate of growth and the growing sense that even the current sluggish expansion could be challenged in the months ahead has created a sense of unease that won’t be easily overcome.

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