In May, U.S. consumer sentiment continued its downward trend as Americans grew increasingly worried about future inflation and the ongoing impacts of trade policies. The University of Michigan's Consumer Sentiment Index fell to 50.8 in a preliminary reading, marking a decline from April’s final figure of 52.2. This represents a significant drop since January 2025 and is one of the lowest readings on record. Despite a recent temporary reduction in tariffs between the U.S. and China, consumers remain pessimistic about economic conditions.
A Closer Look at Economic Anxiety and Policy Effects
In the midst of a challenging economic climate, the latest data reveals deepening concerns among American households. The University of Michigan Surveys of Consumers reported that nearly three-quarters of respondents spontaneously mentioned tariffs as a major concern, reflecting persistent unease over trade policy. This sentiment was particularly pronounced following President Trump’s announcement of a 90-day tariff reduction deal with China, aimed at easing tensions and fostering negotiations for a more permanent agreement.
Despite this reprieve, consumer confidence showed only marginal improvement, underscoring broader anxieties about the economy. Director Joanne Hsu noted that while some survey metrics indicated slight improvements, overall sentiment remained gloomy. Financial assessments also weakened, with personal income expectations declining by almost 10%. Additionally, short-term inflation forecasts rose sharply to 7.3%, up from 6.5% in April—the highest level since April 1981. Long-term inflation projections climbed slightly to 4.6%, driven primarily by Republican respondents.
Federal Reserve Chair Jerome Powell has emphasized the central bank’s commitment to monitoring tariff-induced price changes within its evolving policy framework, which now accounts for greater inflation volatility and frequent supply shocks.
These developments highlight an uncertain economic landscape where both immediate and long-term fiscal stability are under scrutiny.
From a journalistic perspective, this report underscores the intricate relationship between global trade dynamics and domestic economic sentiment. It serves as a reminder of how interconnected modern economies are and how sensitive consumer attitudes can be to shifts in policy. For readers, it prompts reflection on the importance of stable trade relations and effective monetary strategies in maintaining economic resilience. As uncertainty lingers, policymakers must carefully weigh their decisions to avoid exacerbating public anxiety and ensure sustainable growth.