Consumer confidence higher, but still shaky

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NEW YORK --- Americans are feeling better about their job prospects, pushing consumer confidence higher in May. But signs that shoppers are slowing their spending as stocks fall could pose a roadblock to recovery.

Reports show retailers' business weakening in May after a solid spring. Confidence's climb could take a hit if the European debt crisis continues to shrink America's retirement accounts.

"Weakness in the stock market is likely to impact spending on big-ticket items," said Wells Fargo economist Mark Vitner. "During the first quarter, consumers splurged a bit. But I think they'll be pulling in their horns."

The Conference Board said Tuesday that its Consumer Confidence Index rose to 63.3, up from April's revised 57.7. Economists had expected 59.

The increase was boosted by consumers' outlook over the next six months, one component of the index, which soared to the highest level since August 2007. The component that measures how shoppers feel about the current economy rose only slightly.

The index -- which measures how consumers feel about business conditions, the job market and the next six months -- has been recovering fitfully since a low of 25.3 in February 2009. A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth.

Economists already believed confidence will remain weak for at least another year because of high unemployment. But concern is growing that U.S. economic improvements could be reversed.

The Conference Board survey -- based on a random survey of consumers sent to 5,000 households from May 1-18 -- includes volatile days in the stock market but excludes the 376-point plunge last Thursday, its worst one-day drop in more than a year.

"We were starting to see some good signs that we were building momentum" in spending, said Dennis Jacobe, the chief economist at Gallup, whose daily polls have seen deteriorating confidence among shoppers. "The momentum has come to a halt."


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