Conference Board News Release (05/26/15)

The Conference Board Consumer Confidence Index, which had declined in April, increased moderately in May. The index now stands at 95.4, up from 94.3 in April. The Present Situation Index increased from 105.1 in April to 108.1 in May. The Expectations Index edged down from 87.1 in April to 86.9 in May.

“Consumer confidence improved modestly in May, after declining sharply in April,” says Lynn Franco, director of economic indicators at the Conference Board. “After a three-month slide, the Present Situation Index increased, propelled by a more positive assessment of the labor market. Expectations, however, were relatively flat following a steep decline in April. While current conditions in the second quarter appear to be improving, consumers still remain cautious about the short-term outlook.”

Consumers were mixed in their assessment of the job market. Those stating jobs are “plentiful” increased from 19.0% to 20.7%, while those claiming jobs are “hard to get” rose from 25.9% to 27.3%.

Wall Street Journal (05/26/15) Kate Davidson; Jeffrey Sparshott

Demand for durable goods declined a seasonally adjusted 0.5% in April from March, according to the U.S. Department of Commerce, but underlying data suggest business investment is slowly accelerating. March durable goods orders increased an upwardly revised 5.1%. Economists polled by the Wall Street Journal had forecast that overall orders would decline 0.1%.

Durable goods data is volatile and subject to big revisions, but the larger trend indicates demand may be picking up after several weak months. Furthermore, a key measure of business investment rose for the second consecutive month. Orders for nondefense capital goods excluding aircraft rose 1.0% in April. The March reading was upwardly revised to 1.5%.

Wall Street Journal (05/22/15) Jon Hilsenrath; Jeffrey Sparshott

The U.S. Federal Reserve is on track to raise interest rates this year even though the job market hasn’t fully healed, inflation is low, and growth is disappointing, according to chairman Janet Yellen. The bank will remain cautious, she says. It may be several years before the benchmark short-term rate returns to a level considered normal over the long run. Though officials expect the rate to eventually reach 3.75%, it likely will be below that level at the end of 2017. The economy is expected to gain momentum in the coming months.

Even though the unemployment rate fell to the relatively low level of 5.4% in April, it “probably does not fully capture the extent of slack” in the economy, Yellen says. Numerous people have dropped out of the labor market, while others are working in part-time jobs when they prefer full-time jobs.