Consumer confidence fell slightly in May but remains almost as high as it has been since the start of the pandemic. The Conference Board reported Tuesday that its consumer confidence index fell from 117.5 in April to 117.2, its highest level since February 2020, just before the pandemic broke out.
Consumer perception of the labor market also improved, as the percentage of consumers who said they had “plenty” jobs rose from 36.3% to 46.8%. Those who say jobs are hard to come by fell from 14.7% to 12.2%. Unemployment claims have dropped to pandemic lows every week for the past month. The Conference Board’s Expectation Index, based on consumer short-term views of income, business and the labor market, fell from 107.9 in April to 99.1 in May.
Consumer expectations for the future may be less high as the tailwinds from Americans who spend their $ 1,400 worth of stimulus checks may wane. Earlier this month, the Commerce Department reported that US retail sales flattened in April after rising sharply in March when many Americans received these state checks and increased their spending.
Recent government data shows that the country’s gross domestic product – its total production of goods and services – is expected to continue to rise. After gaining 4.3% in the fourth quarter of 2020, the government’s initial estimate for the January-March quarter was a brisk annual rate of 6.4%. Some economists expect even bigger growth for the current April-June quarter – an annual pace of 10% or more – due to an increase in the number of people traveling, shopping, eating out, and resuming their pre-pandemic spending habits.
That optimism is fully reflected in the US markets. Five of the six top winners of the S&P 500 carry airline or cruise line tickers. United Airlines shares rose more than 5% on Tuesday after the airline announced that casual travelers’ ticket returns are close to the pre-epidemic. Delta Air Lines shares rose 2% after the company said bookings were better than expected.