Good sings of economy recovery mean nothing to US consumers?

Although there are signs of economy is going toward a recovery, such as stock prices rising and job losses slowing, consumers are staying cautious.

“The green shoots of U.S. economic recovery are a little less green for American consumers," according to a research note from CIBC World Markets. "Personal spending is no longer in freefall as it was at the end of 2008, but the ongoing contraction in U.S. consumer spending emphasizes that talk of a full-fledged economic recovery is premature."

According to that analysis, consumers spending may decline. As it was written by some CIBC analysts, “Although the worst may be over for U.S. consumers as increased government transfer payments help boost incomes, we expect personal consumption to remain weak for some time to come.”

Report for sales in May will be released on Thursday by government. Sales increased by 0.6%, while decline in the prior month was equal to 0.4%. According to analysts, such an increase can be mostly attributed to higher auto sales and a rise in gas prices. By analysts’ estimation if excluding autos and gas, retail sales gain is equal to 0.1%. “Outside of autos and gas, we expect sales of necessities, like food and drugs, to offset softness elsewhere as chain store results disappointed," according to a Credit Suisse research note. "This breakdown for underlying sales should not be surprising since paychecks have been shrinking." 

University of Michigan and Reuters will report on estimation of consumer sentiment for June anticipating a continuation of the increases seen in recent reports. For June sentiment reading is expected to be 71, compared to 68.7 in May. Despite gains in sentiment readings, overall levels remain relatively low, curbing consumers' buying plans.

According to the report of government on trade balance for April, there is a bit wider deficit as imports pick up a bit more than exports. As estimated trade deficit in April is amounted to $28.8 billion, compared with $27.6 billion in March.