Consumer confidence: Worst since '92
Conference Board's measure falls more than expected in May amid concerns about a weak labor market and poor business conditions.
NEW YORK (CNNMoney.com) -- A key measure of consumer confidence dropped in May to the lowest level in 16 years, as Americans grew more concerned about their jobs and more pessimistic about business conditions.
The New York-based Conference Board said Tuesday that its Consumer Confidence Index dropped to 57.2, the lowest level since October 1992, from a revised 62.8 in April. Economists had expected the index to decline to 61, according to a consensus compiled by Briefing.com.
With gas and food prices on the rise, home values declining and lending policies getting more strict, consumers of all incomes are being hit hard, according to Scott Hoyt, senior director of consumer economics at Moody's Economy.com.
"There is nobody off the hook right now," said Hoyt.
The index - based on a survey of 5,000 U.S. households conducted for The Conference Board by TNS - has now declined for five months in a row. The index uses 1985 as the benchmark year when the index stood at 100.
"Weakening business and job conditions coupled with growing pessimism about the short-term future have further depleted consumers' confidence in the overall state of the economy," said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement.
Those claiming business conditions are bad jumped to 30.6% from 26.5%, while those claiming business conditions are good slumped to 13.1% from 15.4% last month.
The Present Situation Index, which measures where the average consumer feels the economy is right now, decreased to 80.7 from 90.6.
When the average consumer thinks about the economy, the most important factor is always his or her job situation, according to Ken Goldstein, economist at the Conference Board.
The percentage of consumers saying jobs are hard to get was virtually unchanged, 28% versus 27.9% in April. Those claiming jobs are "plentiful" declined to 16.3% from 17.1%
Consumers pay their bills with the paycheck from their job, and "the concern is the paycheck now is getting stretched and it is only going to continue to get stretched," said Goldstein.
The Expectations Index, which measures what consumers think will happen to the economy in the coming months, declined to 45.7 in May from 50 in April.
"Consumers' inflation expectations, fueled by increasing prices at the pump, are now at an all-time high and are likely to rise further in the months ahead," said Franco. "As for the short-term outlook, the Expectations Index suggests little likelihood of a turnaround in the immediate months ahead."
Consumers anticipating business conditions to worsen over the next six months increased to 33.6% from 27.4%, while those anticipating business conditions to improve increased slightly to 10.4% from 10.1% in April.
The percentage of consumers expecting fewer jobs in the months ahead declined slightly to 32.4% from 32.9%, while those anticipating more jobs was virtually unchanged, 8.7% in May versus 8.8% in April.
The proportion of consumers expecting their incomes to increase declined to 13.4% from 15.5%.
In a recession, consumers may really have to batten down the hatches and suffer through a tough period, but consumers expect to move through and out of a recession with some momentum, said Goldstein. According to economic indicators, however, this slowdown in the economy is not a recession.
There is "the sense that we are stuck in a rut here," said Goldstein. "The bigger picture is that there is nothing out there to give us hope that this will get better by July 4th, Labor Day, Thanksgiving."