Overview
- The University of Michigan’s Index of Consumer Sentiment fell to 44.8 in its final May reading released May 22, the lowest level recorded since the survey began in 1952 and the third straight monthly decline.
- Survey respondents singled out higher gasoline prices driven by supply disruptions in the Strait of Hormuz and tariffs as major forces eroding household finances.
- Consumers’ inflation expectations rose, with year‑ahead views near 4.8 percent and five‑to‑ten‑year expectations around 3.9 percent, moves analysts say could alter Federal Reserve policy calculations.
- The drop in confidence is concentrated among lower‑income households and people without college degrees, and 57 percent of respondents said high prices were hurting their personal finances while Independents and Republicans showed especially large declines.
- The record low in household sentiment contrasts with continued gains in equities and crypto, raising risks that weaker consumer spending—which fuels about two‑thirds of U.S. GDP—will hit retail and service sectors and become a key data point for the Fed and markets to watch.