But the Consumer Confidence Index is still flashing a recession concern
of ConsumerAffairsMay 28, 2025
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The Consumer Confidence Index rose sharply in May to 98.0, breaking a five-month decline.
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A significant boost in consumer outlook on income, jobs, and business conditions led the recovery.
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Optimism strengthened following the May 12 U.S.-China tariff announcement, with stock market expectations improving notably.
All of a sudden, Americans are feeling a lot better about the economy.
The Conference Board reports a marked rebound in consumer confidence, with the Consumer Confidence Index jumping 12.3 points to 98.0 in May, up from 85.7 in April. This surge signals renewed consumer optimism following five months of steady declines and comes amid easing trade tensions and improving market conditions.
The increase was driven largely by a resurgence in the Expectations Index, which rose to 72.8, up 17.4 points from April. While still below the 80-point recession warning threshold, this gain reflects growing consumer optimism across all components of the index, including expectations for business conditions, employment opportunities, and income growth.
Stephanie Guichard, senior economist at The Conference Board, noted, The rebound was already underway before the U.S.-China trade announcement on May 12, but clearly gained steam afterward. Consumers were significantly less pessimistic about the economic outlook, and more hopeful about income prospects.
Present conditions improve, but job availability doesnt
The Present Situation Index also saw a 4.8-point lift, climbing to 135.9. Consumers viewed business conditions more favorably, with 21.9% describing them as good, up from 19.2% in April. However, optimism about job availability slipped slightly, marking the fifth consecutive month of erosion in that area.
Although 31.8% of respondents said jobs were plentiful, up modestly from 31.2%, the percentage of those who found jobs hard to get rose to 18.6%, indicating persistent labor market caution.
All demographics are more confident
The uptick in confidence spanned all age groups, income levels, and political affiliations. Republican respondents reported the most pronounced optimism. However, the six-month moving average remains down across all groups due to earlier declines, suggesting that the rebound, while encouraging, has not yet fully reversed the trend.
One of the clearest signs of shifting sentiment was consumers improved outlook on the stock market. The percentage expecting stock prices to increase in the next year climbed from 37.6% in April to 44% in May, while the share anticipating a drop shrank to 37.7%.
Inflation expectations also eased to 6.5% over 12 months, down from 7% in April, contributing to a more positive financial outlook. As a result, purchasing plans for homes, cars, vacations, and big-ticket items such as appliances and electronics all rose. Intentions to spend more on servicesfrom dining out to entertainmentalso showed widespread gains.
Responses to special survey questions revealed divergent financial behaviors. While 36.7% of consumers reported saving for future spending, around a quarter said they had tapped into savings or postponed major purchases. Higher-income households were more likely to save or advance purchases ahead of potential tariffs, while lower-income households reported more financial strain.
Despite these mixed signals, fewer consumers now anticipate a recession in the coming year, and assessments of current and future family finances have improved.
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