Did April showers bring May flowers?

It turns out that, instead of the rain cloud hovering over the US consumer growing darker in May, it dissipated. The latest Conference Board index of consumer confidence surprisingly rebounded to 98, from a gloomy 86 reading in April. This is far from a euphoric number, and April represented the worst since peak-pandemic in 2020, but it shows that Americans’ feelings towards the current and future economic situation have lightened up since the initial tariff announcement.

Some of this improvement was likely influenced by the US-China trade discussion that occurred mid-month, though the Conference Board noted the trend was already visible before the event. Consumers have good reason to feel more sanguine about their situation: the labor market is healthy, current incomes are strong and inflation has generally remained within expectations. However, uncertainty still lingers. The implementation and ultimate impact of trade policy is unclear. Many, including the Federal Reserve, believe it could cause noticeable headwinds for the US economy.

Other data released last week included an increase in initial jobless claims to 240,000, from 227,000 in the prior week, and above the 230,000 four-week average. While weaker, one data point does not make a trend. We’ll look to see any parallels in the labor market releases this week, which include job growth and unemployment statistics.