Tuesday, May 30, 2006

Consumer Confidence Declines

- Consumer Confidence for May fell to 103.2 versus estimates of 100.9 and 109.8 in April.
BOTTOM LINE: Consumer confidence in the US fell from a four-year high in May by the most since Hurricane Katrina battered the Gulf last year and sent energy prices soaring, Bloomberg reported. Optimism about consumers’ present situation fell to 132.5 from 136.2 in the prior month. The proportion of consumers expecting their incomes to rise was 16.6%, the lowest since July 2003. Rising unit labor costs account for two-thirds of inflation. I continue to believe confidence will rebound later this year to cycle highs as stocks rise, long-term rates remain historically low, the labor market remains relatively healthy, inflation decelerates, gas prices fall and irrational pessimism lifts.

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