Consumer Confidence Jumps in May
NEW YORK (AP) _ Consumer confidence jumped sharply in May, approaching the all-time high it reached in January. The rise in the closely watched economic indicator suggested that a series of interest rate increases has not yet slowed down consumer spending.
The Conference Board reported today that its Consumer Confidence Index rose to 144.4 in May following three months of declines, approaching its all-time high level of 144.7 reached in January. The index stood at 137.7 in April and analysts had been expecting a decline in May to 136.
The strong comeback in consumer confidence shows that Americans remain optimistic in their outlook of the economy despite recent volatility in the stock market and a half-dozen interest rate increases from the Federal Reserve over the past year.
Lynn Franco, director of the Conference Board’s research center, said that with unemployment at a 30-year low and other signs of favorable labor market conditions, consumer confidence was expected to remain strong through the summer.
``Volatile financial markets and interest rate hikes are not expected to have a significant impact on consumers’ spirits,″ Franco said.
Economists keep a close eye on consumer confidence readings in order to gauge trends in consumer spending, which makes up about two-thirds of America’s economy.
The sharp jump in consumer confidence comes despite an aggressive push by the Federal Reserve to cool down the economy. The Fed has raised interest rates six times since June in a pre-emptive strike against inflation.
Investors have pushed down the shares of major retailers in recent weeks, anticipating that consumers would slow down their spending.
The consumer confidence figures are based on a survey of 5,000 U.S. households by the New York-based research group. The index compares results to its base year, 1985, when it stood at 100.