The University of Michigan’s final May Consumer Sentiment Index fell to 44.8. This figure represents a downward revision from the preliminary 48.2 reading and a drop from April’s 49.8 level. Consumer confidence now sits below the previous record low set in June 2022.
Rising gasoline prices caused by Strait of Hormuz supply disruptions drove the decline. Federal Reserve Governor Waller noted that higher prices are damaging morale despite resilient consumer spending.
Year-ahead inflation expectations rose to 4.8%. Long-run inflation expectations climbed to 3.9%, exceeding the range observed earlier in 2024. Record-low sentiment and heightened inflation fears suggest potential headwinds for future discretionary spending.