US consumer confidence rebounds sharply in May after prolonged slump

Consumer confidence in the United States saw a significant rebound in May, breaking a five-month streak of declines that had dragged sentiment to its lowest point since the early days of the Covid-19 pandemic.

The Conference Board reported on Tuesday that its Consumer Confidence Index rose to 98, up from 85.7 in April, a 12.3-point increase and the largest monthly gain in over two years.The improvement comes as Americans grow more optimistic about the economy, with inflation easing slightly, job growth holding steady, and fears over former President Donald Trump’s tariff policies subsiding. In recent months, elevated prices- partly fueled by lingering tariffs on Chinese imports had heightened consumer anxiety and dampened economic outlooks, as reported by AP.A key sub-index tracking short-term expectations for income, business conditions, and the labor market surged 17.4 points to 72.8. Although still below the 80-point threshold that typically signals economic growth, the uptick marks a notable turnaround in public sentiment.The share of consumers expecting a recession within the next 12 months also declined, suggesting that Americans are feeling more hopeful about the near-term future.

Consumer spending, which drives roughly two-thirds of US economic activity, could benefit from this renewed confidence. Economists and Federal Reserve officials will be closely watching upcoming data for signs that improving sentiment translates into stronger economic performance in the months ahead.Consumer confidence is an economic indicator that measures how optimistic or pessimistic consumers feel about their financial situation and the overall state of the economy, both in the present and in the near future.