By Anne D'Innocenzio, AP Retail Writer
NEW YORK (AP) — Americans are feeling better about their job prospects, pushing consumer confidence higher in May. But signs that shoppers are slowing their spending as stocks fall could pose a roadblock on the path to recovery.
Already, reports show retailers' business weakening in May after a solid spring season. Confidence's slow climb back to health could take a hit if the European debt crisis continues to shrink Main Street America's retirement accounts.
"It's disconcerting," said Wells Fargo economist Mark Vitner. "Weakness in the stock market is likely to impact spending on big-ticket items. During the first quarter, consumers splurged a bit. But I think they'll be pulling in their horns."
The Conference Board, based in New York, said Tuesday that its Consumer Confidence Index rose to 63.3, up from April's revised 57.7. Economists surveyed by Thomson Reuters had expected 59.
The increase was boosted by consumers' outlook over the next six months, one component of the index, which soared to the highest level seen since August 2007, before the economy entered in a recession. Another component, which measures how shoppers feel about the current economy, rose only slightly.The overall index — which measures how consumers feel about business conditions, the job market and the next six months — has been recovering fitfully since hitting an all-time low of 25.3 in February 2009.
A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth. Economists watch the number closely because consumer spending including health care and other major items, accounts for about 70% of U.S. economic activity.
Economists already believed confidence will remain weak for at least another year because of stubbornly high unemployment. But concern is growing that U.S. economic improvements, including in housing and consumer spending, could be reversed. The Dow Jones industrials plunged below 10,000 Tuesday as investors worried about a global economic slowdown and tensions between North and South Korea.