The Conference Board's consumer confidence index is down to 102.3 in May after an upward revision to 103.7 in April. The reading is above the consensus of 100.0 in the Econoday survey of forecasters. The index is the lowest since 101.4 in November 2022. The decrease is mainly due to a fall in the index for current conditions to 148.6 in May from 151.8. The future conditions index is down only slightly to 71.5 in May from 71.7 in April.

Consumers are feeling more concerned about their present employment prospects, although present business conditions are not perceived as significantly worse than the prior month. Future employment and income prospects are seen as only narrowly positive while future business conditions remain for mild expansion.

The Conference Board noted that the index for future conditions remains below the 80-mark as it has since February 2022 with the exception of December 2022. The Conference Board said a level below 80 is"associated with a recession within the next year". However, no recession has emerged as yet in spite of low readings in 15 of the past 16 months, although the risks seem higher in the present economy as the labor market weakens albeit from exceptionally strong conditions and inflation remains resistant to tighter financial conditions.

The consumer confidence index is expected to sink further in May to 100.0 from April's 101.3, which was much weaker than expected and reflected sharp declines in job and income expectations.

The Conference Board's confidence report surveys consumers on their assessments of the labor market, business activity, and their own financial conditions. The survey is conducted by Toluna, an online community platform. (Conference Board and Toluna)

The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer confidence index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.