Consumer sentiment in the US fell yet again in May, per a closely watched University of Michigan survey, as tariff worries grow increasingly ever-present for consumers.
The index of consumer sentiment dropped to 50.8, down 2.7% on a monthly basis and down nearly 30% since January 2025. The preliminary reading marks the lowest reading in three years, and the second-lowest on record, CNBC reported.
Consumers’ outlook on price changes also spiked. Year-ahead inflation expectations climbed to 7.3% from 6.5% in April. Long-term inflation expectations also rose, ticking up to 4.6% from 4.4% last month.
As tends to be the case with any surveys conducted amid the uncertainty of Trump 2.0, timing matters. The bulk of the survey was completed before the US and China announced a 90-day tariff pause, and tariffs were clearly driving the negative reading.
“Tariffs were spontaneously mentioned by nearly three-quarters of consumers, up from almost 60% in April; uncertainty over trade policy continues to dominate consumers’ thinking about the economy,” Joanne Hsu, the survey’s director, said in the release.
But that also means the preliminary reading could be more bleak than the final reading will be.
“[W]e increasingly suspect that the consumer surveys, and the Michigan survey in particular, are painting an unduly negative picture of the consumer outlook at present,” Oliver Allen, senior US economist with Pantheon Macroeconomics, said in a report, since the Michigan survey didn’t capture any improvement in sentiment that might have come from the tariff pause, per CBS News.
There’s always…the next reading. The final reading for the month will be released at the end of May.
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