American optimism about the economy continued to recover in May, following a dip earlier this year, according to a monthly barometer of consumers’ mood. The Conference Board said its index of U.S. consumer confidence rose to 134.1 in May from 129.2 in April. The measure is now close to the 18-year high it recorded last fall.
The report suggests consumers are undaunted by the prospect of a prolonged trade dispute with China, so far. That, coupled with the hot labor market and briskly growing economy, suggests a possible rebound in consumer spending in the weeks and months ahead. Both retail and home sales posted unexpected declines in April, which could weigh on overall economic growth in the second quarter of the year.
“Consumers expect the economy to continue growing at a solid pace in the short-term, and despite weak retail sales in April, these high levels of confidence suggest no significant pullback in consumer spending in the months ahead,” said Lynn Franco, senior director of Economic Indicators at the Conference Board.
The confidence measure dipped to 121.7 in January as households grappled with the effect of the government shutdown and weakness in the stock market. Those fears now appear to have dissipated.
Consumers who said business conditions were good rose to 38.3% from 37.6% while those who said they were bad fell to 10.2% from 11.3%. Consumers were also upbeat about the labor market, with 47.2% saying jobs were plentiful, up from 46.5% in April while 10.9% said jobs were hard to get, down from 13.3%.
Respondents to the Conference Board’s survey also said they expect both business conditions and the labor market to improve further in the months ahead.