Will ETFs Suffer As US Consumer Sentiment Falls In May?

Ecommerce, Selling Online, Online Sales, E-Commerce

Increasing concerns about the U.S. inflation levels continue to dampen U.S. consumer sentiments. Notably, the University of Michigan’s consumer sentiment index declined to 82.9 in May from 88.3 last month. The reading remained mostly flat with May's preliminary reading of 82.8. The metric also remained on par with economists’ forecasts, per a Reuters poll.

The measure of current economic conditions declined to 89.4 in May from April's 97.2. It also dropped from May's preliminary reading of 90.8. Meanwhile, a gauge of consumer expectations fell to 78.8 in May from April's 82.7. However, the metric was nominally up from the mid-month reading of 77.6.

Moving on, one-year inflation expectation remained mostly flat with May's preliminary reading of 4.6%. Meanwhile, the survey's five-to-10-year inflation outlook reduced to 3% from 3.1%, according to a Reuters article.

In this regard, Surveys of Consumers chief economist Richard Curtin said that "Consumer confidence remained largely unchanged at the reduced level recorded at mid-month. It is hardly surprising that the resurgent strength of the economy produced more immediate gains in demand than supply, causing consumers to expect a surge in inflation," (per a Reuters article).

Current U.S. Economic Scenario

The world’s largest economy is steadily recovering from the coronavirus outbreak-induced slowdown. The pandemic also seems to be getting under control in the United States. Accelerated coronavirus vaccine rollout has been the major factor that has helped gaining control over the aggravating outbreak.

The decline in the number of coronavirus cases has increased optimism among market participants toward faster recovering and reopening of the U.S. economy. Moreover, a change in consumer behavior and shopping patterns is being observed as Americans are visiting stores for shopping merchandise like new clothes which signal toward normalcy. Large retailers like Walmart (WMT), Target (TGT), Home Depot and Macy’s have been gaining from the reopening economy and gradual return to normalcy.

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