Consumer confidence rose unexpectedly in May, ending a three-month decline as Americans cheered a resilient labor market.
The Recent code reading The Conference Board had 102, up from 97.5 in April and more than 96 economists surveyed by Bloomberg.
“Consumers’ assessment of current business conditions is slightly less positive than last month,” Dana Peterson, chief economist at the Conference Board, said in the release. “However, a strong labor market continued to improve consumers’ overall assessment of the current situation. Views of current labor market conditions improved in May, as fewer respondents said finding work is difficult.”
Peterson added, “Less consumers expected a decline in future business conditions, job availability and income, resulting in an increase in the expectations index.”
13.5% of consumers said jobs are “hard to get,” up from 15.5% in April.
This comes as the economy continues to show more resilience than many expected. The unemployment rate rose slightly to 3.9% from 3.8% in April, but has been below 4% for 27 months. The longest stretch since the Vietnam War. Meanwhile, the number of Americans filing for unemployment benefits remains low, and various trackers of wage growth see workers’ wages rising faster than the rate of inflation.
Still, high prices remain a major sticking point for consumers and help explain why confidence hasn’t fully recovered. Consumers cited prices — especially prices for food and groceries — as having the “biggest impact” on their view of the U.S. economy. The Conference Board’s 12-month inflation expectations rose to 5.4% from 5.3% the previous month. This also came with a slight uptick in the percentage of consumers expecting higher interest rates in the next year.
A new reading of the personal consumption expenditure index, the central bank’s preferred measure of inflation, is expected on Friday morning.
The Conference Board provided insight into who among the population feels good about the economy.
With the stock market at record highs, wealthy Americans are more upbeat about the state of the economy. Consumers earning more than $100,000 a year showed the “biggest rise in confidence” among all income cohorts, according to the Conference Board. In a six-month period, Peterson’s confidence is high among consumers under 35 who earn more than $100,000 a year.
According to Charles Schwab senior investment strategist Kevin Gordon, more than 48% of consumers expect stock prices to rise over the next year, the third-highest reading in the Conference Board’s history.
“We have a historically low unemployment rate and the wealth effects of investing in the market continue to grow. So it’s not a big surprise that consumers are healthy,” Invesco global market strategist Brian Levitt told Yahoo Finance.
Josh Shaffer is a Yahoo Finance reporter. Follow him on X @_joshschafer.
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