Consumer confidence scores published Friday show a burst of positive consumer sentiment in May that bodes well for the economy, according to the University of Michigan’s Surveys of Consumers.
The preliminary consumer sentiment reading, which in March (90.7) and April (89) hovered around 90, has surged to 95.8 so far this month, its strongest level since June 2015. Economists surveyed by The Wall Street Journal had expected May to clock in around 90 as well.
The gains are showing up among lower-income and younger households as well as higher-income and older ones, according to the survey’s website, good news for retailers that have struggled to connect with middle-class customers.
These results from the University of Michigan’s consumer survey index bode well for the coming year, with a significant bump among more income and age groups.
“Consumer sentiment rebounded in early May due to more frequent income gains, an improved jobs outlook, and the expectation of lower inflation and interest rates,” the survey’s chief economist, Richard Curtin, said in a statement. “Nearly all of the gains were in the Expectations Index, which rose to its highest level in nearly a year. To be sure, the data still indicated the negative impact of uncertainty about future economic policies associated with the Presidential election, but its overall impact was overwhelmed by favorable economic developments.”
Retailers still face significant headwinds as apparel sales continue to fall and move online, and the presidential election could prove to be another obstacle as the year wears on, Curtin said.
The department store model is especially under fire, considering their dependence on apparel sales and their connection to malls, many of which are faltering in the current atmosphere. Shoppers are prioritizing experiences over buying more clothing, and in some areas favoring retail in urban settings or malls with their own emphasis on experiences with restaurants, gyms, and other amenities.