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Economic Report: Euphoria over the economy reopening is fading, consumer confidence survey shows

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The numbers: The confidence of Americans in the U.S. economy slipped in May for the first time in six months as they grew more worried about a rising cost of living and future job prospects.

The closely followed survey of consumer confidence slipped to 117.2 in May from revised 117.5 in the prior month, the privately run Conference Board said Tuesday.

The original April reading was notably higher at 121.7 and had marked a pandemic high.

The index was forecast to decline slightly to 119.5 based on a survey of economists compiled by Dow Jones and The Wall Street Journal.

All three major surveys of consumer confidence have declined in May even as states loosened or eliminated altogether restrictions put in place during the pandemic.

Big picture: The big success of the U.S. vaccination campaign has reduced the number of coronavirus cases close to a pandemic low and given Americans plenty of hope for the future.

Yet the reopening of the economy, combined with massive federal stimulus money, has unleashed a surge in pentup demand. The cost of lumber, used cars, farm crops and many other goods and services have jumped to record highs and pushed inflation sharply higher.

The Federal Reserve insists the burst of inflation will ease once the pandemic is over, but rising prices have increased the angst on Main Street and Wall Street.

Key details: Part of the survey that asks how consumers feel about the economy right now surged again to 144.3 from 131.9 — a new pandemic high.

That still leaves the so-called current conditions index well below the pre-pandemic peak, however.

Consumers were also less optimistic about the future. A measure of how Americans view the next six months sank to 99.1 from 107.9 and touched a three-month low.

A higher percentage of households expect fewer jobs to be available in the months ahead once the momentum from the economy reopening begins to wane.

What they are saying: “Consumers’ diminished confidence about business conditions, the labor market, and income prospects over the next six months could be due to waning fiscal support and higher inflation,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics.

Market reaction: The Dow Jones Industrial Average
DJIA,
-0.07%

and S&P 500
SPX,
-0.07%

rose in Tuesday trades, but gains were trimmed after the survey results.

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