Americans’ attitudes toward the economy improved this month for the first time since January, thanks to better perceptions of the job market.
The Conference Board’s Consumer Confidence Index for this month climbed to a reading of 102, up from 97.5 in April. Americans of all age groups felt better about the economy, the survey noted. That’s after consumer confidence declined in each of the prior three months.
“Consumers’ assessment of current business conditions was slightly less positive than last month. However, the strong labor market continued to bolster consumers’ overall assessment of the present situation,” Dana Peterson, chief economist at The Conference Board, said in a release.
Compared to the University of Michigan’s consumer survey, the Conference Board survey puts more weight on perceptions of the job market. Unemployment remains below 4%, job openings still exceed the number of unemployed people seeking work and employers are still pumping out jobs at a brisk pace.
But elevated inflation still looms large. That’s precisely why consumer confidence declined for three straight months prior to May, when inflation readings came in hotter than expected. The April survey showed that “consumers cited prices, especially for food and groceries, as having the greatest impact on their view of the US economy,” Peterson said.
The survey also showed that respondents felt more upbeat about the stock market, with “48.2% expecting stock prices to increase over the year ahead, compared to 25.4% expecting a decrease and 26.4% expecting no change.”
Major stock indexes have soared to record highs recently, with the Nasdaq Composite briefly breaking above 17,000 in intraday trading Tuesday.
Separately on Tuesday, the Federal Reserve Bank of New York released survey data on consumer expectations for a wide array of public policies, such as taxes, unemployment benefits and housing assistance.
The survey, conducted in April, found that a higher share of Americans saw improved prospects for an increase in the federal minimum wage as well as higher welfare and unemployment benefits. Additionally, respondents’ expectations increased for expansions in federal student aid as well as student loan forgiveness.
However, in a time when home prices are setting new highs, the survey also showed that pessimism heightened about increases in housing assistance and affordable housing.
The average likelihood of reduced housing assistance increased to 15%, the highest reading since December 2019, New York Fed data shows.
Still, consumers were more optimistic about tax benefits for homeowners. The average likelihood for a higher mortgage interest tax deduction climbed to 24.8% — the highest ever reading for this New York Fed series, which was started in November 2015.
This story has been updated with additional context and details.
