Via Stephen Stanley at Amherst Pierpont Securities:
Consumer confidence as measured by the Conference Board fell by about 2 points in May, a very surprising result. After the index had slipped in April, I had expected a bounceback in May (in line with the University of Michigan gauge, which jumped by 6 points this month). The deterioration this month in the Conference Board measure mostly reflected a drop in assessments of the present situation. The current labor market index eased off after reaching a 7-year high in April, though in the big picture, the index has been stuck within a 2-point range since December. I am particularly puzzled that assessments of current business conditions slipped by almost 2 points in May to the weakest reading since late-2014. Meanwhile, expectations for employment, business conditions, and income were broadly steady in May.
As my long-time readers well know, I have never been a big believer in the various consumer confidence gauges. I’ve always subscribed to the “watch what they do, not what they say” mantra. The juxtaposition between the robust consumer spending figures and the softer confidence numbers released on the very same day is especially hard to reconcile, but I come down on the side of the spending figures, as it always make sense to follow the actual dollars. I am also not going to worry over these results when the University of Michigan gauge jumped in May to its best level in nearly a year. Let’s say that consumer attitudes, netting out the two main measures, was pretty close to steady.