Consumer attitudes, as measured and indexed by the University of Michigan, rose to 110.7 at the end of May, compared to 109.2 a month earlier. Those were still not as high as levels earlier in the year, however. While economists have been raising concerns about inflation, business expansion and economic growth have been rolling along, although maybe not quite so powerfully as at the beginning of the year. Business executives talk more about the tight job market and difficulties finding workers than about sluggish sales or eroding markets. While retailers face the same challenges in staffing, they are at least consoled by all those employed persons who keep shopping in their stores.
Evidence is at hand that shows the rate of economic growth is slowing.
The gross domestic product expanded at a 7.3 percent clip in the final quarter of 1999, compared with 5.4 percent in the first three months of 2000. Forecasters see further slowing to about 4.0 percent to 4.5 percent growth in the June quarter and around 3.5 percent in the second half. The growth, coupled with the Federal Reserve's concerns and subsequent actions, have fueled expectations of inflation, which means higher prices and probably increasing consumer disenchantment with shopping. Economic analysts are forecasting the inflation rate will increase to about 3.1 percent this year, according to a survey conducted by the Federal Reserve Bank of Philadelphia. In the previous quarterly survey, the anticipated inflation rate was pegged at 2.7 percent.