Consumer Confidence for the month of May showed an unexpected decline, falling from 119.4 down to 117.9. Economists had been expecting this month’s reading to come in at 119.5. With May’s decline, Consumer Confidence saw its first back to back drop since May of last year but still remains well above its long-term average of 93.8 dating back to 1967.
Start a two-week free trial to Bespoke Institutional today.
One of the most interesting aspects of the monthly Consumer Confidence report is the breakdown in confidence among different income levels. While sentiment tends to move in the same direction across different income ranges, there are often varying degrees in the magnitude of the move. During the Obama years, even though he campaigned and often spoke about leveling the playing field for all Americans and not just the rich, those with the highest income levels saw the largest increase in confidence during his years in office.
Looking at current levels of confidence based on income levels, in the last two months, we have seen the complete opposite of the trend that has been in place for several years now. As shown in the chart below, sentiment among consumers with incomes greater than $50K has dropped over 10 percentage points in the last two months, which is the largest two-month decline in two years. Alternatively, confidence levels among consumers with incomes between $35K and $50K actually increased this month and is barely down in the last two months. Finally, for consumers with annual incomes below $15K (lower chart), confidence is at its highest level in nearly 16 years! It’s only two data points, but it will be interesting to see how this plays out in the months ahead.