American Consumers And Investors Confident, Yet Cautious About Economy

Consumer Spending Slows Down

American Consumers And Investors Confident, Yet Cautious About Economy
June 6, 2016

American confidence in the economy is good, but still not entirely secure when it comes to interest rates, according to the consumer index for May.

The index, used as a measure of the American public’s confidence in the economy and their willingness to spend, was at 94.7 in April. It dropped to 92.6 in May, as concerns about the long-term job market caused on-going anxiety.

While the rate in April was a seven-year high in month-on-month gain, a rise not seen since August 2009, the subsequent drop showed that American consumers and investors are still cautious about the state of the economy and their own personal finances.

Consumer spending has been similarly up and down, with the figure staying flat in March this year, and rising by just 0.2% in February. In contrast, spending on durable goods, such as cars, rose a significant 2.3% in April. Spending on non-durable items, such as clothing and food, rose by 1.4%.

Despite this, April was a positive month, with wages also shown to have risen by 0.5%. It is seen as an indicator by financial commentators and investors that the Federal Reserve will raise interest rates in the coming weeks. Notwithstanding, consumer optimism was cautious.

Lynn Franco, director of economic indicators at the Conference Board, commented: "Consumers remain cautious about the outlook for business and labor market conditions. Thus, they continue to expect little change in economic activity in the months ahead.”

In the past week, U.S. Federal Reserve chair, Janet Yellen, appeared to agree, in general, saying that she expected the central bank to raise interest rates within the year.

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