Americans’ views of the economy improved in May after five straight months of declines sent consumer confidence to the lowest level since the onset of the Covid-19 pandemic, largely driven by anxiety over the impact of Donald Trump’s tariffs.
The Conference Board said on Tuesday that its consumer confidence index rose 12.3 points in May to 98, up from April’s 85.7, its lowest reading since May 2020.
A measure of Americans’ short-term expectations for their income, business conditions and the job market jumped 17.4 points to 72.8, but remained below 80, which can signal a recession ahead.
The proportion of consumers surveyed saying they think a US recession is coming in the next 12 months also declined from April.
Trump’s aggressive and unpredictable policies – including massive import taxes – have clouded the outlook for the economy as well as the job market and raised fears that the American economy is headed toward recession.
However, Trump’s tariff pullbacks, pauses and negotiations with some trading partners may have calmed nerves for the time being.
“The rebound was already visible before the May 12 US-China trade deal but gained momentum afterwards,” said Stephanie Guichard, senior economist at the Conference Board.
Trump had initially imposed a stunning 145% tariff on most goods from China, but agreed to a 90-day pause for negotiations. The US also came to an agreement with the UK earlier in May.
Over the Memorial Day holiday weekend, Trump and European Union leaders announced that the president’s 50% tariff on imports from the EU, which he announced on Friday, were on hold until 9 July. That announcement would not have affected the board’s survey, which closed on 19 May.
The Conference Board said the rebound in confidence this month was broad-based across all ages and income groups.
Consumers’ assessments of the present economic situation also improved, with the exception of their view on job availability, which weakened for the fifth straight month despite another strong US jobs report.
The labor department earlier this month reported that US employers added a surprising 177,000 jobs in April and the unemployment rate remained at a low 4.2% as the job market showed resilience amid Trump’s trade wars.
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