As negative views on business conditions and the labor market abated, consumer confidence unexpectedly rose sharply in the US Chamber of Commerce in May, for the first time in four months.

The US Chamber of Commerce Consumer Confidence Index for May was 102, which was significantly better than the expected 96. The value before April was revised to 97.5. The consumer confidence reading for May surpassed the estimates of all economists surveyed by the media.

In terms of sub-indices, the current status index is 143.1, with a previous value of 142.9. This is the first increase since January of this year; the expected index is 74.6, but it is still below the psychological threshold of 80. The previous value was 66.4. The expected index for May recorded the biggest monthly increase since July last year.

The latest report from the Council also shows that consumers think the possibility of a recession in the US economy next year is rising for the second month in a row. Furthermore, consumers are increasingly concerned about rising prices and household finances. The report's relative highlights are people's views on the labor market, business conditions, and the US stock market.

Consumers seem more concerned about inflation, and the average expected inflation rate has risen to the highest level this year: people's inflation expectations for the next year have risen to 5.4%, the highest level since December 2023. Dana Peterson, chief economist at the Advisory Council, said, “Consumers believe that prices, especially the prices of food and groceries, have the greatest impact on their views on the US economy.”

People have mixed opinions about the labor market, saying fewer consumers have “adequate” employment opportunities, but on the other hand, fewer consumers say jobs are “hard to find”. With the recent improvement in income prospects, people are less pessimistic about the future prospects of the job market.

Expectations for rising US interest rates and a rise in the US stock market have both increased.

People's plans to buy homes have declined, plans to buy cars have remained flat, and plans to buy large household appliances have soared.

According to the analysis, despite the improvement in consumer confidence at the US Consultative Conference in May, overall confidence has been poor in recent months. The reason is that the country's inflation remains high, household debt has reached a record high, and the job market is weak. Americans were generally pessimistic about the economy before the November presidential election because the Federal Reserve still kept interest rates high for 20 years.

The Michigan Consumer Confidence Report released last week shows that US short-term inflation expectations in Michigan declined in May, and consumer confidence improved slightly from the initial value. This may be related to falling oil prices, but the confidence index is still at a six-month low.

Consumer confidence is affecting economic growth in the coming months. Pessimistic consumer sentiment will inhibit spending levels, thereby affecting economic recovery, while optimistic consumer sentiment will help the future economy.

After the US consumer confidence data was released, US bond yields rose:

• US two-year Treasury yields rose by about 1.5 basis points to above 4.92% in the short term, and the overall decline during the day narrowed to less than 2.6 basis points.
• The 20-year US Treasury yield rose 2.5 basis points to a new daily high of nearly 4.70%.
• The yield on 30-year US Treasury bonds rose from 4.58% to above 4.60%. The overall rise during the day exceeded 3.5 basis points, reaching a new daily high.
• The S&P 500 index remained flat. The Dow fell 130 points and fell more than 0.3%, and the NASDAQ rose 55 points and rose more than 0.3%.