Consumer sentiment experienced a third consecutive month of decline this month, per the University of Michigan’s closely watched survey of consumers.
Consumer sentiment went from 49.8 in April to 44.8 in May, a 10% drop. The dramatic decline underscores how severely the Iran conflict, combined with soaring energy prices and trade uncertainty, has eroded American consumer confidence.
Year-over-year, consumer sentiment is down 14.2% from 52.2 in May 2025.
Joanne Hsu, director of the Surveys of Consumers at University of Michigan, noted that the cost of living continues to be a first-order concern, with 57% of consumers spontaneously mentioning that high prices were eroding their personal finances, up from 50% last month.
“Lower-income consumers and those without college degrees posted particularly strong sentiment declines; these groups are more sensitive to increases in the cost of gas and other essentials,” she said. “Critically, consumers appear worried that inflation will increase and proliferate beyond fuel prices, even in the long run.”
Additionally, sentiment decreased for Independents and Republicans—with both groups reaching their lowest readings of the current presidential administration—but mostly remained the same for Democrats, according to the surveys.
The Current Economic Conditions Index came in at 45.8, down 12.8% from April’s 52.5, and down 22.2% from May 2025’s 58.9.
The Index of Consumer Expectations reading came in at 44.1, down 8.3% from April’s 48.1 and down 7.9% from May 2025’s 47.9.
Year-ahead inflation expectations grew from 4.7% last month to 4.8% this month.
“The current reading substantially exceeds the 3.4% reading seen in February 2026 prior to the start of the Iran conflict, along with all 2024 readings,” noted Hsu.
Long-run inflation expectations increased from 3.5% in April to 3.9% in May, notably higher than the 2.8% to 3.2% range seen in 2024, commented Hsu.
“This month’s increase in long-run expectations reflects sizable jumps among independents and Republicans,” Hsu said. “For the latter group, long-run inflation expectations are currently more than double their February 2025 reading on a monthly basis.”
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