Overview
- The University of Michigan’s final consumer sentiment index plunged to 44.8 in May, its third straight monthly drop and a reading near the survey’s weakest levels.
- The Conference Board’s consumer confidence index fell modestly to 93.1 for May with current-condition views softening and short-term expectations edging up.
- Both surveys and economist comments linked the downturn to higher gasoline and energy prices driven by the Iran-related conflict and supply worries.
- The Conference Board found about two-thirds of respondents said inflation is causing them to cut or postpone discretionary purchases, raising downside risk for retail, travel and dining.
- Financial markets showed only limited reaction to the weaker readings, but economists warn sustained spending pullbacks and higher inflation expectations could affect retail sales and the Federal Reserve’s policy choices.