The outlook of American consumers whose actions drive the majority of economic activity, has jumped to levels not seen since before the financial crisis as low inflation, higher equity prices and a stable it not expansive job markets bolster confidence.
The Conference Board reported that consumer sentiment rose to 76.2 in May, the highest reading in more than five years. Not since February 2008 has the general view of the economy been this positive. Analysts had forecast a rise to 71.2 from April’s 68.1.
Consumers’ assessment of their current situation jumped to 66.7 in May from 61.0 the previous month. This was the strongest score since June 2008.
Confidence in the future was even more pronounced climbing to 82.4 from 74.3 in April. It was the best judgment on where the consumer economy is likely to be in six months since last October.
This expectation component is volatile often being swayed by transitory or changeable factors such as gasoline and equity prices which can quickly reverse. Since its low of 27.30 in February 2009, it has rebounded above 80.0 seven times including this month; each rise was followed shortly by substantially lower reading. The monthly average over the past fifteen years is of 84.92; the twenty year average is 77.44 and the thirty year average is 90.67.
Chief Market Strategist