New U.S. Department of Labor jobs data shows first-time unemployment claims for the week ending May 21 fell to 210,000 from the prior week, beating Bloomberg economist estimates of 215,000.
The tight labor market seems to be propping up consumer spending even if people are starting to worry about their prospects.
The University of Michigan’s Index of Consumer Sentiment for May fell to 58.4, down from 65.2 and reflecting a 29.6 percent decline from 82.9 a year ago.
“This recent drop was largely driven by continued negative views on current buying conditions for houses and durables, as well as consumers’ future outlook for the economy, primarily due to concerns over inflation,” said Joanne Hsu, the university’s surveys of consumers director.
Despite the decline, consumers were less pessimistic about their personal finances than future business conditions. The “majority of consumers expected their financial situation to improve over the next five years,” Hsu said. “A stable outlook for personal finances may currently support consumer spending.”
Meanwhile, Dollar General CEO Todd Vasos has said his company is likely to pick up customers trying to make their dollar stretch amid high inflation.
“The consumer is holding up well, and it really goes toward what I’ve talked about all along, and that is as long as she’s gainfully employed, that makes the biggest difference in how she shops,” Vasos said earlier this year.
The dollar retailer’s core customers are starting to shop “more intentionally, and we’re starting to see that next tier of customers start to shop with us a little bit more,” he said, adding that this behavior could “probably pick up steam as we move through Q2 and into the back part of the year as things continue to tighten up.”
The Conference Board’s next Consumer Confidence Index releasing on Tuesday should provide some insights on the consumer mindset and labor sentiment and what they might mean for retail sales.