Consumer sentiment in May is expected to remain roughly unchanged as Americans are still in the doldrums about the fragile economy, according to an early reading for the month.
The preliminary Reuters/University of Michigan monthly index of consumer sentiment will be released Friday at 10 a.m. EDT with a final report coming May 30. The market anticipates a reading of 62.5, according to a consensus estimate of Wall Street economists surveyed by Thomson/IFR. That's edged down from April's 62.6 reading, which is the lowest in 25 years.
Wall Street pays close attention to consumer sentiment as its corollary, consumer spending, represents about 70 percent of U.S. gross domestic product. GDP measures the value of final goods and services produced.
The survey consists of telephone interviews of 500 respondents who are asked about their attitudes toward, and expectations of, the U.S. economy. The index, created in 1952, reached its lowest reading, 51.7, in May 1980, during a deep recession. Internet hype helped push it to its 112 peak in January 2000.
Pessimism has been fueled by cocktail of consumer woes: higher gas, food costs, falling home values and weaker income growth, according to the survey. As a result, the federal tax rebate to stimulate the economy will only provide a temporary boost to cautious spenders
"The recent acceleration in the loss in confidence indicates a longer and potentially deeper recession," Richard Curtin, the survey's director, said last month in a statement.
On Tuesday, the Commerce Department said that retail sales overall dipped by 0.2 percent in April, largely stemming from a 2.8 percent dip in car sales. However, excluding autos, retail sales rose by a surprising 0.5 percent.
Several major discounters this week also reported strong first-quarter profits.
Wal-Mart Stores Inc. posted a 6.9 percent increase, helped by improved customer service, better inventory control and strong international sales.
TJX Cos., which operates stores under the T.J. Maxx, Marshalls, HomeGoods names, reported a near 20-percent increase, meeting analysts' projections.
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