Consumers still not real confident

Don Hogsett, June 3, 2002

Consumer confidence inched up slightly in May but has remained virtually unchanged over the past three months as Americans remain cautious about the prospects for the balance of the year.

The Consumer Confidence Index tallied by The Conference Board moved up slightly, to a reading of 109.8 from 108.5 in April, as consumers said they take some cheer from an economic recovery and an improving labor market. But while they feel good about current business and labor conditions, they're less certain about the balance of the year and are reining in their buying plans, the business think tank reported.

"Consumers' upbeat mood about current business and labor conditions underscores the economy's continuing recovery, but the latest retreat in expectations suggest that the pace of economic growth will not accelerate in the months ahead," said Lynn Franco, director of The Conference Board's Consumer Research Center.

More than 21 percent of consumers rate current business conditions "good," up from 19.7 percent the preceding month. And only 18.8 percent said current conditions are "bad," down from 19.4 percent in April. And 20.9 percent say jobs are "plentiful," unchanged from April.

But looking ahead over the next six months, consumers remain cautious. Only 24.9 percent expect business conditions to improve, down from 26.0 percent in April. And the number who expect conditions to deteriorate climbed to 6.7 percent from 6.4 percent a month ago.

With the outlook somewhat more clouded, consumers are pulling in their horns and saying they expect to do less buying for homes, autos, appliances and vacations. Reinforcing that "stop and save" mentality, fewer consumers — 20.6 percent, down from 21.1 percent in April — expect a pay increase during the next six months.

Consumer confidence by region

Region % Change
New England 3.1%
Middle Atlantic 3.3
East North Central 4.5
West North Central -11.5
South Atlantic -1.5
East South Central -1.4
West South Central -12.8
Mountain 6.5
Pacific 8.2

Consumer Buying Plans — May
Plans to purchase over the next six months

Source: The Conference Board
Homes -7.7%
Cars -1.3
Major appliances -11.8
Carpets -10.9
U.S. vacation 1.6
Foreign vacation -10.3

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