Consumer sentiment appears to have evened out in May as economic issues like inflation and trade wars are so far less impactful than some feared, according to the latest data from the University of Michigan.
The Index of Consumer Sentiment came in at 52.2 in May, the same reading as seen in April and ending a four-month streak of decreases. Surveys of Consumers Director Joanne Hsu noted that May’s preliminary results pointed to another month of downturns, but changed pace following the pause of Chinese tariffs.
Year-over-year, however, the index is now down 24.5%, demonstrating that consumers are still not feeling hope in full force just yet.
The Current Economic Conditions index clocked in at 58.9, down 1.5% from last month and 15.4% from the same time last year. Hsu stated that this index was down because positive changes in sentiment were “offset by declines in current personal finances stemming from stagnating incomes throughout May.”
Consumer expectations for the future saw some growth in May. The Index of Consumer Expectations registered at 47.9, up 1.3% from last month. However, this index is still down year-over-year by 30.4%.
In the same vein, year ahead expectations for inflation saw very little change, growing from 6.5% to 6.6%. Hsu noted that this was the smallest monthly increase seen since the election back in November. Long-run inflation expectations also bettered, falling from 4.4% in April to 4.2% in May, the first decline seen since December.
“Given that consumers generally expect tariffs to pass through to consumer prices, it is no surprise that trade policy has influenced consumers’ views of the economy,” concluded Hsu. “In contrast, despite the many headlines about the tax and spending bill that is moving through Congress, the bill does not appear to be salient to consumers at this time.”
