Low wages cause dip in consumer confidence
Harsh winter weather and worries about low wages had a negative impact on consumer confidence in May, the University of Michigan and Thompson Reuters said Friday in their monthly survey.
The consumer “Sentiment Index” registered a 81.9 in the May survey, down from 84.1 in April, and 84.5 in May 2013. Despite last month’s drop, researchers said the results are still part of a five-month stretch that’s higher than at any point since 2007.
The survey also said the lack of a strong economic surge in the coming months could leave a much greater impact on consumer sentiment. Part of such a surge would need to include wage and job growth. Tiny wage gains in May meant that nearly half of all households anticipated declines in inflation-adjusted incomes during the year ahead, according to the study.
Overall, the survey’s Chief Economist Richard Curtin, expects consumer spending to continue to rise as long as the economic recovery meets consumer expectations.
“Consumers anticipate that the economy will post a much improved pace of growth, and more importantly, create more robust jobs growth in the months ahead,” he said. “Although a good deal of the first -quarter strength in spending was due to higher utility and insurance payments, consumers will increasingly purchase a broader array of products, especially products that are discounted to fit into more limited budgets.”
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