Consumer Sentiment Drops to New Low, University of Michigan Survey Finds

By Matt Grossman

Higher gasoline prices and the tense standoff in the Middle East helped push consumer sentiment to a new all-time low in May, with rising anxiety about future inflation, according to the University of Michigan's monthly survey.

The survey's headline index declined to 44.8 this month, from April's 49.8, per results published Friday morning. The April reading was itself the lowest final number ever recorded to that point. An initial May reading published earlier this month came in at 48.2.

Consumers' grim mood spanned people from both political parties and reflected concerns about high living costs and the prospect of more inflation ahead, the survey's director Joanne Hsu, said.

A number of the people surveyed mentioned that high prices were eroding their personal finances. Lower-income people, and people without college degrees, were particularly unhappy.

Dismal sentiment has been a puzzle to economists in recent years, because the survey's traditional relationship with consumers' actual behavior has blurred. In earlier decades, a grimmer economic mood usually meant lower inflation-adjusted spending, while shopping picked up when consumers reported more optimism.

During several stretches since the pandemic, however, deep drops in sentiment haven't corresponded with any real belt-tightening by shoppers. Analysts have suggested a variety of explanations for why a reasonably healthy economy subjectively feels worse to consumers, from frustration with high prices to political polarization.

Personal-spending growth accelerated in March, and sales at retailers have mostly held up well too. A healthy consumer economy may get further support from a labor market that has looked more stable this spring than at the start of the year.

Perhaps more worrying to economic policymakers will be a sharp rise in consumers' long-run inflation expectations.

Survey respondents said they now expect inflation to land at 3.9% in the long run, a big increase from 3.5% in April. Officials at the Federal Reserve are highly sensitive to consumers' long-run inflation expectations. They worry that when people expect much higher prices in the future, they will accelerate their spending and demand higher wages, making inflation a self-fulfilling prophecy.

Write to Matt Grossman at matt.grossman@wsj.com

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May 22, 2026 10:33 ET (14:33 GMT)