U.S. consumer confidence drops in May

Consumer confidence fell to its lowest level in eight months in May as consumers worried about slow hiring, a significant stock market drop and the global economy, according to The Conference Board.

The Conference Board's Consumer Confidence Index dropped to 64.9 in May from a revised 68.7 in April. Economists were expecting a reading of 70. A reading of 90 or higher indicates a healthy economy.

The index measures how shoppers feel about business conditions, the job market and the next six months. Economists watch the index closely because consumer spending accounts for about 70 percent of economic activity and is a crucial part of a strong rebound.

Those expecting business conditions to improve during the next six months fell to 16.6 percent from 18.5 percent. However, those expecting business conditions to worsen decreased to 13.1 percent from 14.2 percent.

Additionally, 15.8 percent expect more jobs during the next six months compared with 16.9 percent in April; those expecting fewer jobs increased from 18.4 percent to 21 percent.

Consumer confidence fell in May, following a slight decline in April," says Lynn Franco, director of The Conference Board Consumer Research Center. "Consumers were less positive about current business and labor market conditions and more pessimistic about the short-term outlook. However, consumers were more upbeat about their income prospects, which should help sustain spending. Taken together, the retreat in the present situation index and softening in consumer expectations suggest the pace of economic growth in the months ahead may moderate."

Date : 5/30/2012