According to a University of Michigan’s report on U.S. consumer sentiment released this week, consumer confidence continues to decline and reached in May a 7-month low. The report also shows that the indicator failed to meet expectations of an upswing at least for this month.
The results may be puzzling since low gas prices and unemployment levels should boost just about everyone’s confidence in economic rebound. Economists speculate that the lack of confidence among U.S. consumers may be linked to a sluggish economic recovery in this year’s first three months.
But slow economic recovery was a foreseeable outcome after a harsh winter, strong currency, and West Cost labor disputes that delayed shipping sometimes by months.
The recent report also shows that consumer confidence indicator for this month is the lowest since October 20014, and hit the second- lowest point since December 2012.
However, May report’s results are very different from those reported in January, when consumer sentiment hit a 11-year high. Also, last month the indicator jumped to one of its highest levels recorded in the last 8 years.
Yet, the University of Michigan’s findings were also confirmed by The Thomson Reuters, a research and mass media firm formerly known as the The Institute for Scientific Information. Additionally, a report released earlier this week revealed that retail sales volume stalled in April as customers tended towards saving more than anything.
Analysts acknowledged that this year’s first quarter was “tough” for retailers because consumers would rather keep in their pockets the extra cash they had managed to save from cheap gasoline rather than go on a spending spree just like in the good ol’ days.
A spokesperson from Surveys of Consumers stated Friday that U.S. consumer sentiment fell abruptly in May because Americans became convinced after a weak first quarter that the economic rebound would be a lengthy process with many ups and downs to come.
By contrast, in May 2014 the U.S. economy experienced a quick and robust revival but back then there weren’t as many problems as we face today. Surveys of Consumers said that reduced production and meager employment prospects along with falling exports and a widening trade deficit triggered the economic slowdown during this year’s second-quarter.
According to the academic report on consumer sentiment, the indicator slipped 7.3 points this month to 88.6, which is a sharp decline from April’s reading of 95.9. Also, analysts expected a reading of 96 for the current month, Thomson Reuters reported.
Yet economists are confident that the situation would improve by the end of the year.
“Conditions for consumers are solid, and sentiment should increase through the rest of this year and into next,”
a PNC Financial Services Group’s analyst declared Friday.
Image Source: Wiser.com
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