FX.co ★ US Consumer Sentiment Close to Record Low

The University of Michigan's measure of consumer sentiment in the United States experienced a significant decline in May 2025, falling to 50.8 from 52.2 in April, and significantly underperforming market predictions of 53.4, based on preliminary data. This decrease marks the fifth consecutive month of decline, making it the lowest level recorded since June 2022, and the second-lowest ever. Rising inflation expectations and renewed concerns over tariffs are major factors contributing to this drop in consumer sentiment. Both the index measuring current conditions (which decreased from 59.8 to 57.6) and the expectations index (which fell from 47.3 to 46.5) deteriorated. Assessments of personal finances took a hit, declining by nearly 10% due to weakening incomes. Notably, tariffs were mentioned by nearly 75% of consumers, a rise from almost 60% in April, indicating that uncertainty around trade policy continues to heavily influence consumers' perspectives on the economy. Regarding price trends, short-term inflation expectations soared to 7.3% from 6.5%, marking the highest level since 1981, while long-term inflation expectations slightly increased to 4.6% from 4.4%.