The recent developments in America have shown that consumer confidence is dip while inflation rates are high. This could be a sign of what’s coming next for the economy, with people less likely to purchase new gadgets or cars due turреnflationary concerns
When the Conference Board released a survey on Tuesday that revealed consumers’ perceptions of labor markets softening in May, it suggested Federal Reserve aggressive monetary policy actions to slow down demand were starting to take effect.
Senior economist at BMO Capital Markets in Toronto Jennifer addressed the situation.
“We can never underestimate the U.S. consumer,” she said. “But plans to pull back on purchases, and become a little more cautious, is something that the Federal Reserve would welcome as it aims to cool demand.”
The Conference Board’s consumer confidence index slipped to a reading of 106.4 in May while data for April was revised higher, showing it at 108.6 instead of the previously reported 107.3 The board’s indicator did better than what was seen from Michigan University which stated their survey hit an 11 year low.
The labor market is tightening despite consumers’ unfavorable perception. The Conference Board noted that “they do expect the current situation to remain relatively strong, which should continue to support confidence in the short run.”
The last day of March saw a new all-time high in job openings and workers submitting resignations. Stocks on Wall Street were lower, while inflation expectations dipped to 7.4%. The dollar was steady against other currencies but rose relative to the U.S Treasury market which reflects investors’ perception that economic growth will be stronger than expected going forward.
The Federal Reserve has raised their policy interest rate by 75 basis points two months ago with the U.S central bank expecting to hike it’s overnight lending facility a little bit more each month.
The recent rise in commodity prices has caused many people’s spending plans to change. There was a dip as well for the share who planned on purchasing motor vehicles over six months while fewer have shared their intention with appliances such as refrigerators or washing machines.
