Background on The Conference Board and its Consumer Confidence Index
The Conference Board, a nonprofit organization dedicated to analyzing, informing, and promoting action that helps businesses grow, prosper, and compete in an increasingly globalized economy, publishes the Consumer Confidence Index (CCI).
The CCI measures how optimistic or pessimistic consumers are regarding the state of the US economy. It consists of two main components: the Present Situation Index and the Expectations Index.
Who is Donald Trump?
Donald J. Trump is the 45th President of the United States, serving from January 2017 until his successor’s inauguration on January 20, 2021. As a businessman and politician, Trump has been known for his protectionist policies, including imposing tariffs on various goods and services.
May’s CCI Spike: A Trade Truce Effect
The Conference Board reported that the US Consumer Confidence Index (CCI) rose to 98 points in May, up from 85.7 points in April. This increase surpassed expectations and was largely attributed to the temporary trade truce between the United States and China.
Key Factors Behind the Confidence Boost
- Trade Tensions Easing: The recent trade truce between the US and China, signed on May 12, has contributed to improved consumer confidence.
- Optimism on Economic Conditions: Consumers have become less pessimistic about business conditions, job availability in the next six months, and future income prospects.
- Tariff Concerns Persist: Despite the boost, consumers remain worried about potential price increases due to tariffs and their broader negative impact on the economy.
Expert Opinions on the CCI Surge
Stephanie Guichard, Principal Economist at The Conference Board: “Consumer confidence improved in May after five consecutive months of decline.” She added, “The rebound was already visible before the US-China trade agreement on May 12 but gained momentum afterward.”
Carl Weinberg, Chief Economist at High Frequency Economics: “Consumer confidence remains very low according to this survey.” He noted, “Consumers are nervous,” and mentioned that their expectations for inflation over the next year remain “extraordinarily high.”
Oliver Allen, Chief US Economist at Pantheon Macroeconomics: “Although the rebound is notable, the survey window missed a ‘likely hit’ from the escalation of tariff threats against the European Union.”
Trump’s Tariffs and Their Impact on Consumer Confidence
Since taking office in January 2017, President Trump has imposed broad tariffs on most of the United States’ trading partners, with China being a particular focus. These tariffs have raised concerns about inflation and economic growth.
In May, following negotiations between the authorities, the US and China agreed to drastically reduce tariffs temporarily. However, concerns about potential price increases due to tariffs and their broader negative impact on the economy persist.
Key Questions and Answers
- What is the Consumer Confidence Index (CCI)? The CCI measures how optimistic or pessimistic consumers are regarding the state of the US economy. It consists of two main components: the Present Situation Index and the Expectations Index.
- Who is Donald Trump? Donald J. Trump is the 45th President of the United States, known for his protectionist policies, including imposing tariffs on various goods and services.
- What caused the surge in May’s CCI? The trade truce between the US and China, signed on May 12, contributed to improved consumer confidence. Consumers became less pessimistic about business conditions, job availability in the next six months, and future income prospects.
- Why are consumers still worried about tariffs? Despite the boost in confidence, consumers remain concerned about potential price increases due to tariffs and their broader negative impact on the economy.
