By Vicki Needham - 05/30/14 01:28 PM EDT
The harsh winter led to a decline in consumer confidence in May that could hold back spending even as the economy bounces back this summer.
The Thomson Reuters/University of Michigan final index of sentiment for May dropped to 81.9 from 84.1 in April.
“The small May loss should not detract from the fact that consumer confidence during the first five months of 2014 was higher than any time since 2007,” he said.
The main concern expressed by consumers was a lack of prospects for wage growth not the slow rate of first-quarter growth.
Still, the data indicate that consumer spending will pick up for the rest of the year.
“Although a good deal of the first-quarter strength in spending was due to higher utility and insurance payments, consumers will increasingly purchase a broad array of products, especially products that are discounted to fit into more limited budget,” Curtin said.
But the economy has to keep chugging along and meet economists' expectations for fast growth for consumers to feel better about spending and their future financial prospects.
The survey’s index of current conditions, a measure of personal finances, declined to 94.5 in May from 98.7 a month earlier.
Looking six months down the road, expectations fell to 73.7 from 74.7 last month.
When asked about their financial prospects for the year ahead, 25 percent expected an improved financial situation down from 32 percent last month.
Gains in incomes were anticipated by only half of all households.
Importantly, consumers under age 45 expected the smallest income increases in six months.
The decline was primarily due to less favorable discounts, which are critical to buyers who only expect limited income gains.
While homebuying conditions were viewed less favorably, that sentiment was offset by improved conditions for selling homes, largely because of rising home values.