United States: Inflation and the war in Iran are weakening consumer confidence

US consumer confidence dipped slightly in May as concerns about inflation and the economic fallout from the Iran war continued to weigh on American households, according to data released Tuesday by the Conference Board.

The consumer confidence index fell 0,7 points to 93,1, compared to a revised figure of 93,8 in April. While this decline was less pronounced than some economists had feared, it reflects an increasingly pessimistic outlook for the economy and the labor market.

The survey notably shows that the proportion of Americans who believe jobs are becoming harder to find has reached its highest level since 2021. Written responses collected from consumers also continue to reflect persistent concerns about price developments and the overall economic situation.

This deterioration in household morale comes in a context marked by rising prices caused, according to several analysts, by the customs duties imposed by the president. Donald Trump as well as by the economic repercussions of the conflict involving the United States and Iran.

The US president largely based his 2024 campaign on the promise to control inflation. But persistent economic tensions now appear to be fueling discontent among a segment of the electorate, just months before the midterm elections that will determine control of Congress.

The decline in confidence measured by the Conference Board remains less brutal than that observed recently in the University of Michigan survey, which reported a historic drop in American consumer confidence in May.

Despite this gloomy climate, some economists point out that American households are not yet in a state of pessimism comparable to the most critical periods, such as the Great Recession or the COVID-19 crisis. They note, however, that consumers are increasingly looking to reduce their spending in the face of the rising cost of living.