Consumer confidence has been increasing for the first time since November

Consumer confidence has been increasing for the first time since November

Washington - there was a while in which the Americans hardly felt optimism for the economy. However, consumer confidence has increased by 12.3 points this month and achieved a value of 98, as the Conference Board reported in its latest survey published on Tuesday. This is the first monthly increase since November and the largest increase since March 2021.

a ray of hope for consumers

In the past few months, the comprehensive political changes of President Donald Trump, including his persistent trade war, have burdened people's mood towards the economy. Last month, consumer confidence had fallen to the lowest level since the early days of Covid pandemic. But progress in Trump's negotiations with other countries about trade issues gave the Americans a glimmer of hope.

"The recovery was visible on May 12 before the US China trade agreement, but then increased in dynamics," said Stephanie Guichard, Senior Economist at the Conference Board. "The monthly improvement was mainly driven by the expectations of consumers, since all three components of the expectation index-business situation, employment prospects and future income-have risen compared to the April low."

economic uncertainties remain

Despite the increase in consumer confidence, there are economic concerns. Trump has to agree even more than a hundred trade agreements by the beginning of July, since its mutual tariffs, if no trade agreement is negotiated, should come into force again. This uncertainty raises the question of what effects it exerts on consumers that make up two thirds of the US economy.

"The consumer confidence may have increased, and the Americans have reason to be happy, especially through the tariff cuts, especially towards China," said Robert Frick, corporate economist at Navy Federal Credit Union, in a comment that was published on Tuesday. "But if the prices rise in one or two months due to the existing tariffs, it will be a sobering memory that a new inflation struggle has just begun."

Trump's trade agreement

Trump's trade war is still in the flow, but some countries have signaled that they are willing to enter into cooperation and possibly close a complete trade agreement. Great Britain was the first country to present a concept for a framework on May 8th without announce an actual trade agreement. However, some details have been agreed, such as a reduced taxation of auto imports from the United Kingdom.

On May 12th, China and the United States in Geneva agreed to drastically reduce the tariffs to their respective goods for an initially 90-day period, which is considered an unexpected breakthrough in a tightening.

However, a potential trade agreement between the USA and China is still facing numerous challenges. Last week, China's Ministry of Commerce said that the United States "undermined" the Geneva talks after the Trump administration had warned companies to use AI chips from the national technology leader Huawei. Beijing also rejected Trump's demand that China should prevent the flow of fentanyl to the USA, and explained that that was "a problem in the United States, not Chinas".

EU and trade talks

The European Union said on Sunday that it was ready to accelerate the trade talks with the United States. This meant that Trump postponed the threatened 50%customs increase to EU imports by July 9th. Trump reported that he and the President of the European Commission, Ursula von der Leyen, had a "very nice conversation" that led to this break.

"(from the Leyen) said that she wanted to lead serious negotiations," said Trump to reporters at the Morristown Municipal Airport in New Jersey. "July 9th would be the day, that was the date she asked. Could we postpone it from June 1 to July 9th? I agreed."

an eye on consumers **

Although consumer confidence may begin to recover, Trump's trade war is far from over. This is closely observed by Wall Street and the Federal Reserve whether consumer demand remains in the positive area or breaks down due to constant uncertainties.

It has been a bit difficult lately to estimate the actual health of consumer education. In the past few months, the Americans have preferred purchases, especially cars, to avoid Trump's tariffs. This has distorted important economic indicators such as retail. Will consumers continue to issue funds after these short -term purchase incentives?

An important indicator of the underlying demand in the economy - known as final sales to private domestic buyers - accelerated to 3 % from 2.9 % in the fourth quarter in the first quarter. All eyes will be aimed at this number if it is published for the second quarter in July.

On Friday, the Ministry of Commerce is expected to publish the April data on budget expenses, income and the preferred inflation measure of the FED. This data should give market observers a better understanding of whether consumers become more reluctant or continue to open their wallets.