Consumers’ mood dims again in final May report

ANN ARBOR, Mich. – The mood of U.S. consumers fell this month to its lowest level in 28 years, but not quite so far as expected, the Reuters / University of Michigan Surveys of Consumers said today in its final report for May.
The survey’s Consumer Sentiment Index fell 2.8 points to 59.8 – the lowest since the 58.7-point reading of June 1980 – from April’s score of 62.6.
By comparison, preliminary data released May 16 had indicated the index fell 3.1 point to 59.5 points. (READ MORE) Analysts had expected the index to match its preliminary reading, based on the responses of economists polled by both Reuters and Bloomberg News before today’s report.
The survey’s Expectations Index – an indicator of future consumer spending, based on consumer hopes for the economy over the next half-year – fell more sharply than anticipated. It fell 2.2 points to a final May reading of 51.1, rather than the 51.7 points of the preliminary estimate, from April’s 53.3 points. The new score was the lowest since October 1990.
Consumers’ price fears rose, with survey respondents predicting that inflation a year from now will soar to 5.2 percent, up from April’s 4.8-percent estimate and unchanged from the preliminary May report.
The final survey report is based on responses from about 500 households, compared with the 300 responses of the preliminary report.
“There was practically unanimous agreement among consumers that the economy is in a recession, which is interesting since there is still a raging debate among economists about whether the economy is actually declining,” Stephen Stanley, chief economist at RBS Greenwich, in Greenwich, Conn., told Bloomberg News.
The Reuters/University of Michigan Surveys of Consumers report is produced each month by the University of Michigan and distributed by Reuters. Additional information is available at www.sca.isr.umich.edu.