Rising gas prices, Iran tensions dent U.S. consumer confidence
U.S. consumer confidence fell to 93.1 in May as higher gasoline costs and concerns over the Iran conflict weighed on households, the Conference Board reported.
The Conference Board reported U.S. consumer confidence slipped to 93.1 in May, down 0.7 point from April and slightly above economists’ expectations of 92. The data were released Tuesday.
The Board’s present conditions measure fell 3.2 points to 121.2, reflecting weaker assessments of business activity and hiring. The expectations index, which tracks short-term views on income, business and labor prospects, rose one point to 74.4. The labor market differential — the share saying jobs are ‘plentiful’ minus those saying jobs are ‘hard to get’ — declined 0.6 percentage point to 6.9.
Dana Peterson, chief economist at the Conference Board, attributed the decline to ‘the inflationary impacts of the war in the Middle East’ and noted references to ‘prices and oil and gas’ increased for a second month while mentions of ‘war, geopolitics, and conflict’ remained elevated.
A University of Michigan consumer survey published earlier in May showed sentiment fell to 44.8 from April’s 49.8, a record low. Joanne Hsu, director of that survey, described the reading as ‘just below the previous historical trough seen in June 2022’ and pointed to rising inflation expectations amid higher gasoline costs.
The Conference Board pointed to energy concerns tied to disruptions near the Strait of Hormuz and broader tensions involving Iran as factors that have pushed up oil prices in recent months. The report also cited a series of supply disruptions over recent years as weighing on household financial outlooks despite steady employment.
Confidence rose slightly among adults aged 35 to 54 but weakened among younger and older groups. Economists noted employed workers continue to benefit from relatively stable labor market conditions while job seekers face a tougher environment.
Investors and policymakers are expected to monitor the personal consumption expenditures price index, the Federal Reserve’s preferred inflation gauge, due later this week for additional signs of inflation pressure.
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