April’s showers of stock market volatility and escalating tariffs did not bring out May flowers for consumer sentiment.
The University of Michigan said Friday that its preliminary read of consumer sentiment for May was “essentially unchanged” from the prior month’s dismal level. The index for consumer sentiment dropped to 50.8 from April’s 52.2.
This is the second-lowest level in records stretching back decades. The index hit its lowest level ever in June of 2022 as consumers were hit with the worst inflation in forty years.
Inflation fears stemming from tariff hikes are once again playing a big role in depressing consumer sentiment.
“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 director of the survey, said in a statement.
Year-ahead inflation expectations continued to climb in May, rising to 7.3 percent from 6.5 percent last month. Inflation fears were stable—albeit at extraordinarily high levels—among Democrats but moved up among Republicans.
Similarly, Republicans were also drivers of the decline in overall sentiment, with plunges in both the assessment of current conditions and expectations for the future. Among Democrats, sentiment was relatively stable at a very depressed level, slipping slightly to new all-time lows on both current conditions and expectations. Independents saw a slight decline in the current conditions gauge and a small improvement in expectations.
Consumer sentiment has declined for five consecutive months and is now down about 30 percent since December.
The decline in sentiment among Republicans and the increase in fears of inflation among Republicans indicates that economic worries are spreading. There’s still a highly partisan tilt in the figures—the expectations index among Democrats fell to 22.5 from 22.7, while among Republicans it dropped from 95.9 to 90.8.
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