The Conference Board's consumer confidence index rises noticeably to 102.0 in May after a modest upward revision to 97.5 in April. The May reading is well above the consensus of 95.3 in the Econoday survey of forecasters. The May index does not entirely retrace the decline in April from 103.1 in March, but it does suggest that consumers were reacting to negative news in April and have regained much of the lost ground in confidence. Worries about the job market have turned around, although consumers are less assured about the outlook for inflation. The Conference Board's average 12-month inflation measure is up a tenth to 5.4 percent in May from 5.3 percent in April.

The index for the present situation is up to 143.1 in May after a small upward revision to 140.6 in April. The components show consumers were significantly more optimistic about present employment conditions, although slightly less about present business conditions.

The expectations index is higher at 74.6 after a revision higher to 68.8 in April. The components for expected conditions show a switch to anticipating gains in personal income, a good labor market, and expansion in business about six months from now.

The consumer confidence index is expected to fall back in May, to a consensus 95.3 versus 97.0 in April which compared with expectations for 104.0 and March's downward revised 103.1. Consumer confidence has missed Econoday's consensus the past three reports.

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.