Americans might be feeling better about the economy after all

Shopping is a bit more fun as consumer confidence rose sharply in May - Photo by UnSplash +

It's largely thanks to the job market

Americans may be warming up to the economy after months of souring on their prospects.

The Conference Board's Consumer Sentiment Index rose to 102 points in May from 97.5 in April, the economics research group said Tuesday. The reading, which surveys Americans on questions including whether they plan to buy new cars or appliances, follows three months of declines in the closely-watched index.

Confidence improved among consumers of all age groups, but it was especially high among those under the age of 35 making more than $100,000 a year.

A big reason for the upbeat view is the strong job market. Unemployment stood below 4% in April, with job openings exceeding the number of unemployed people looking for work.

Fewer survey respondents said jobs were "hard to get," outweighing the slight decline in the number of people who said jobs were "plentiful," said Dana Peterson, chief economist at The Conference Board. 

"The strong labor market continued to bolster consumers’ overall assessment of the present situation," she said.

Peterson said the index has stayed in a relatively narrow range since the onset of the coronavirus pandemic in 2020. Before then, consumer confidence had been consistently on the rise since the 2009 financial crisis. 

On the other hand

The latest reading isn't all rosy. More survey respondents said a recession is likely over the next twelve months compared with the previous month. Plus, a slightly fewer 20.3% of respondents said business conditions were good, down from 20.8% in May.

The Conference Board is just one of many popular indicators trying to gauge how people feel about the economy. Other economic surveys tell a different story.

Its hopeful results run contrary to the Index of Consumer Sentiment by the University of Michigan, which said earlier this month that such sentiment plunged to its lowest levels in six months in large part because of a reacceleration in prices of commonly-bought goods.

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