U.S. consumer optimism saw a significant boost in May, driven by hopes for a resolution in the trade conflict between the U.S. and China. According to a survey released Tuesday, the Conference Board’s Consumer Confidence Index surged to 98.0, marking a 12.3-point increase from April and far surpassing the Dow Jones consensus estimate of 86.0. This rebound follows five consecutive months of declining sentiment, reflecting growing concerns over the economic impact of the escalating U.S.-China trade war.
Trade Peace and Economic Sentiment
Much of the positive sentiment was attributed to developments in the U.S.-China trade dispute, particularly President Donald Trump’s decision on May 12 to halt the most severe tariffs. Stephanie Guichard, senior economist for global indicators at the Conference Board, noted that the rebound in confidence was visible before the May 12 U.S.-China trade deal, but it gained momentum after the truce was announced. The agreement between the two countries marked the second major reversal of Trump’s reciprocal tariffs, offering hope for de-escalation in the trade war.
Key Confidence Indicators Show Positive Trends
The increase in consumer confidence was accompanied by a rise in other sentiment indicators. The present situation index rose to 135.9, a 4.8-point increase, and the expectations index surged to 72.8, up by 17.4 points. Investors also became more optimistic, with 44% now expecting stock prices to be higher over the next 12 months, a 6.4 percentage-point increase from April. Views on the labor market also improved, with 19.2% of respondents expecting more job opportunities in the next six months, compared to 13.9% in April. Additionally, the proportion of those expecting fewer jobs fell to 26.6%, down from 32.4% in April.
Improvements Across Demographics and Political Affiliation
Sentiment improvements were observed across various demographics, including age, income, and political affiliation. Notably, the strongest improvements were seen among Republicans. Despite this, the labor market outlook remained mixed, with 31.8% of respondents saying jobs were “plentiful,” while 18.6% felt employment was “hard to get,” a slight increase from the previous month.
