CNBC attributed some of the surge to a cooling of the trade war between the US and Red China.
However, May’s rebound in confidence was broad-based across all age groups and all income groups. It was also shared across all political affiliations, with the strongest improvements among Republicans. However, on a six-month moving average basis, confidence in all age and income groups was still down due to previous monthly declines. Survey officials said while sentiment improved across age, income and political affiliation, the “strongest improvements” came from Republicans.
The present situation index - based on consumers’ assessment of current business and labor market conditions - increased to 135.9, up 4.8 points, and the expectations index - based on consumers’ short-term outlook for income, business, and labor market conditions - posted a major surge to 72.8, a 17.4-point gain. Investors also showed more optimism, with 44% now expecting stocks to be higher over the next 12 months, up 6.4 percentage points from April.
Compared to April, purchasing plans for homes and cars and vacation intentions increased notably, with some significant gains after May 12. Plans to buy big-ticket items—including appliances and electronics—were also up. Likewise, consumers’ intentions to purchase more services in the months ahead, with almost all services categories rising. Dining out remained number one among spending intentions, followed by streaming services, while plans to spend on movies, theater, live entertainment, and sporting events increased the most over last month.
Views on the labor market also improved, with 19.2% of respondents expecting more jobs to be available in the next six months, compared with 13.9% in April. At the same time, 26.6% expect fewer jobs, down from 32.4%. However, the level of respondents saying jobs were “plentiful” edged higher to just 31.8%, while those saying employment was “hard to get” increased to 18.6%, up 1.1 percentage points.
There were broad reasons for the increase in consumer confidence.
President Trump has tamed inflation, lowered gas prices, equalized trade, and secured historic investments, Americans are feeling the results of the new Golden Age, said the White House in a release touting the good news.
- Consumer confidence surged in May with the biggest monthly jump in four years, according to the Consumer Confidence Index — far surpassing economists’ expectations.
- Bloomberg: “A gauge of consumer expectations for the next six months surged by the most since 2011, while a measure of present conditions climbed as well, data released Tuesday showed. The improvement in confidence was broad across age and income groups as well as political affiliations.”
- A majority of Americans say the country is on the right track for the first time in decades, according to new polling — while the RealClearPolitics polling average for the direction of the country is at its most favorable since May 2021.
Consumer confidence often translates into voter support for the incumbent party – when consumers are confident and optimistic they see no reason to change who is running the country. This should be a strong message to Republicans on Capitol Hill not to screw things up by tanking the tax cuts and economic growth policies that are central to President Trump’s Big Beautiful Bill.
- Consumer confidence index
- Republican party
- big beautiful bill
- inflation
- gas prices
- trade war
- Present situation index
- Expectations index
- stocks
- Wall Street
- Labor market
- unemployment rate
- Right Track index
- Economic growth
