Consumer confidence rebounds despite ongoing tariff concerns

Consumer confidence in the United States increased in May after five consecutive months of deterioration after a stopping of high tariff rates between the United States and China, although concerns about tariffs that raise prices and harm the economy have remained.

The Conference Council said on Tuesday that the consumer confidence index rose by 12.3 points to 98 in May, much higher than the modest height to 87 expected by the economists covered by Reuters.

Almost half of the consumer confidence polls were collected after May 12, when the Trump administration reached a deal to reduce the customs tariffs on Chinese imports from 145 % to 30 % for 90 days, in exchange for reducing China from its tariff from 125 % to 20 %.

“The bounce was already visible before the American -Chinese commercial deal on May 12, but it gained momentum after that,” said Stephanie Gwechadd, the largest economist of the Conference Council. “The monthly improvement was largely driven by consumer expectations, as all the three components of the expectations index – work conditions, employment prospects, and future income rose from their lowest levels in April.”

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“Consumers have been less pessimistic about working conditions and the availability of jobs over the next six months and regained optimism about future income prospects. Consumer’s evaluation of the current situation has improved.”

However, she added that “while consumers were more positive about the current working conditions than last month, their evaluation of the availability of the current jobs was weakened in the fifth consecutive month.”

The Conference Council report found that the reversal of consumer confidence occurred in all age groups and income groups, as well as through political affiliations-although the declines in the previous months mean that the moving average for a period of six months is still low.

Consumer morale in the United States decreased to a low record in May due to inflation concerns and uncertainty in customs tariffs

Consumers have noticed concerns about customs tariffs and increased inflation. (Gabby Jones / Bloomberg via Getty Images / Getty Images)

The customs tariff continued to present it prominently in the conference’s book responses, which also included optimism about commercial deals.

The report said: “In particular, consumers continued to express their concerns about increasing winding prices and negative effects on the economy, but some also expressed his hope that the declared and future commercial deals will support economic activity,” the report said.

He added: “While inflation and price rise remained an important concern for consumers in May, there were also some references to reducing inflation and low gas prices.”

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The report showed that the average inflation forecast for consumers more than 12 months decreased to 6.5 % after it rose to 7 % in April.

I also asked consumers a special question about whether they had changed their spending and financial behavior recently, as more than a third (36.7 %) said they were putting money for spending in the future. About a quarter of consumers said that they used savings to pay the price of goods and services (26.6 %) and postpone the main purchases (26 %).

Reuters contributed to this report.