The figures suggest that persistently high inflation, particularly in categories like food and energy, is weighing on household sentiment and straining budgets. That’s forcing more Americans to dip into savings and load up their credit cards to support spending.
Consumers expect prices to rise at a still-elevated 7.4% rate in the next year, the report showed. Plans to buy automobiles, homes and appliances all declined in May.
“Indeed, inflation remains top of mind for consumers, with their inflation expectations in May virtually unchanged from April’s elevated levels,” Lynn Franco, senior director of economic indicators at The Conference Board, said in a statement.
“Looking ahead, expect surging prices and additional interest rate hikes to pose continued downside risks to consumer spending this year,” she said.
A gauge of current conditions dropped to 149.6, suggesting consumers had a weaker assessment of the labor market. The Conference Board’s expectations index — which reflects consumers’ six-month outlook — fell to 77.5.
The share of consumers who said jobs were “plentiful” decreased to 51.8%, the lowest in a year. Still, consumers stayed generally upbeat about the labor market six months from now.
Americans were mixed about their short-term financial prospects. Government data out Friday is expected to show average hourly earnings grew at a slower rate in May from a year ago.