Consumer confidence jumped in May as households grew more upbeat about the labor market, suggesting the economy remained on solid ground despite signs that activity was slowing after being temporarily boosted by exports and a build-up of inventories.
Reuters reported that the surge in confidence reported by the Conference Board came despite an escalation in tensions in the 10-month trade war between the United States and China, which sparked a sharp sell-off on Wall Street. It mirrors strength exhibited by another sentiment surveys in the middle of this month.
Economists said the strong readings likely did not fully capture the impact of the trade standoff between Washington and Beijing. The cut-off date for the Conference Board survey was on May 16. The U.S. raised existing tariffs on $200 billion in Chinese goods to 25% from 10% on May 10, prompting Beijing to retaliate with its own levies on American imports.
“So there was at least some time for the recent escalation in the trade spat with China to factor in,” said Tim Quinlan, a senior economist at Wells Fargo Securities in Charlotte, North Carolina. “But at this stage, consumers are nonplussed.”
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