NEW YORK - Soaring gasoline prices and weakening job prospects left shoppers gloomier about the economy in May, sending a key barometer of consumer sentiment to its lowest level in almost 16 years.
The Conference Board said yesterday that its Consumer Confidence Index dropped to 57.2 from a revised 62.8 in April. Economists surveyed by Thomson Financial/IFR had expected a reading of 60.
The May reading marked the fifth straight month of decline and was the lowest since the index registered 54.6 in October 1992, when the economy was coming out of a recession.
Economists closely watch sentiment readings because consumer spending accounts for more than two-thirds of the nation's economic activity.
"Weakening business and job conditions coupled with growing pessimism about the short-term future have further depleted consumers' confidence in the overall state of the economy," Lynn Franco, director of the Conference Board's Consumer Research Center, said in a statement.
Franco said consumers' worries about inflation, fueled by increasing prices at the gas pump, were now at an "all-time high" and were likely to rise further in the months ahead. She said that based on consumers' outlook on the economy, she believed there was little likelihood of a quick turnaround.
Mark Vitner, senior economist with Wachovia Corp., agreed, saying that as "awful as these numbers" looked, he did not believe confidence had bottomed out yet - an ominous sign for consumer spending.
The Consumer Confidence report, derived from responses received through May 20 from a representative sample of 5,000 U.S. households, has a margin of error of plus or minus 2.5 percentage points. It is based on a 1985 index level of 100.