Views on the economy improved in May after the fifth consecutive month of decline was driven by fears over the impact of Donald Trump’s tariffs, and the fifth consecutive month of decline brought consumer confidence to the lowest levels since the onset of the COVID-19 pandemic.
The conference committee said Tuesday that its consumer confidence index rose 12.3 points in ’98 from 85.7 in May.
The short-term expectations for Americans’ income, business conditions and job markets rose 72.8 points to 17.4 points, but fell below 80, indicating a recession.
The proportion of consumers surveyed that they believe the US recession is coming in the next 12 months has also fallen since April.
Trump’s aggressive and unpredictable policies, including massive import taxes, clouded the outlook for the economy as well as the job market, and raised fears that the US economy was heading towards a recession.
But Trump’s tariff pullbacks, suspensions and negotiations with some trading partners could have calmed the nerves for the time being.
“The rebound was already visible before the US-China trade contract on May 12, but it gained momentum afterwards,” said Stephanie Gichard, senior economist at the conference committee.
Trump initially imposed a stunning 145% tariff on most items from China, but agreed to a 90-day suspension for negotiations. The US also signed an agreement with the UK at the beginning of May.
Over the Memorial Day holiday weekend, Trump and European Union leaders announced that the president’s 50% tariff on imports from the EU, which he announced on Friday, is pending until July 9th. The announcement would not have affected the board’s investigation, which ended May 19th.
The conference committee said this month’s confident rebounds are extensively based across all age and income groups.
Consumers’ ratings of the current economic situation have also improved, but have been weakened for five months despite another strong US employment report, except for views on employment availability.
The Labor Bureau reported earlier this month that unemployment rates remained 4.2% lower as U.S. employers added an astounding 177,000 jobs in April, and the job market showed resilience amid Trump’s trade war.