Consumer Confidence Blooms

Consumer confidence improved two months in a row and in May rose to its highest level in eight months, according to researchers at the Conference Board.

Growing optimism among the survey sample of 5,000 U.S. households indicate current conditions are better. Prospects for business conditions and employment in the next six months are also getting brighter.

The Conference Board Consumer Confidence Index now stands at 54.9, up from 40.8 in April. The Present Situation Index increased to 28.9 from 25.5 last month. The Expectations Index rose to 72.3 from 51.0 in April.

“Growth in the second quarter is likely to be less negative than in the first,” said Lynn Franco, director of The Conference Board Consumer Research Center. “Looking ahead, consumers are considerably less pessimistic than they were earlier this year, and expectations are that business conditions, the labor market and incomes will improve in the coming months. While confidence is still weak by historical standards, as far as consumers are concerned, the worst is now behind us."

According to the survey, respondents claiming business conditions are "good" increased to 8.7 percent from 7.9 percent. However, those claiming conditions are "bad" increased to 45.3 percent from 44.9 percent.

Those expecting business conditions will improve over the next six months increased to 23.1 percent from 15.7 percent, while those anticipating conditions will worsen declined to 17.8 percent from 24.4 percent in April.

Similarly, the current employment picture improved and prospects for the next six months look even better. Those claiming jobs are "hard to get" fell to 44.7 percent from 46.6 percent in April. The percentage of consumers expecting more jobs in the months ahead increased to 20 percent from 14.2 percent, while those anticipating fewer jobs decreased to 25.2 percent from 32.5 percent.

Contact Thomas L. Gallagher at tgallagher@joc.com.