Another report released on Tuesday showed that US consumer confidence is falling amid rising prices, which is putting the squeeze on consumers and raising uncertainty on the overall health of the US economy. Tuesday’s report from the Conference Board showed that consumer confidence is deteriorating as a result of current expectations, which matched the University of Michigan’s gauge of consumer confidence released last week. Consumer confidence is widely considered a leading economic indicator. Here’s more from the Conference Board’s report.\

• The Conference Board Consumer Confidence Index declined to 93.1 in May from 93.8 in the previous month. Confidence has been down since the beginning of the year as tensions in the Middle East rise.
• US consumers are relatively cautious about current economic conditions. They are feeling the impact of higher prices, particularly at the gasoline pump. How this may weigh on their personal finances and the labour market is concerning consumers.
• Approximately two-thirds of US consumers reported that they are pulling back on spending in response to rising price pressures. Many have delayed larger purchases and are buying cheaper versions of the same item.
• The Conference Board’s gauge of consumer sentiment has not fallen as much as the index from the University of Michigan but is still way off its pre-pandemic levels of 130.0.
• Last week, it was reported that the University of Michigan’s Consumer Confidence Index fell to a record low level in May.

Lower consumer confidence has historically been a negative sign for economic activity. As confidence weakens, consumers tend to pull back on spending and investment, which could hinder overall economic growth. Conditions are relatively similar in Canada. Consumer confidence has weakened this year amid heightening geopolitical tensions. Energy prices have pushed higher, forcing many Canadians to scale back on discretionary spending.

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