Financial News: U.S. Consumer Sentiment Unexpectedly Continues To Deterior

U.S. Consumer Sentiment Unexpectedly Continues To Deteriorate In May

05/16/2025 - 10:25:00 (RTTNews)

(RTTNews) - Consumer sentiment in the U.S. has unexpectedly continued to deteriorate in the month of May, according to preliminary data released by the University of Michigan on Friday.

The University of Michigan said its consumer sentiment index dipped to 50.8 in May after slumping to 52.2 in April. Economists had expected the index to inch up to 53.4.

With the unexpected decrease, the consumer sentiment index has fallen to its lowest level since hitting 50.0 in June 2022.

"Uncertainty over trade policy continues to dominate consumers' thinking about the economy," said Surveys of Consumers Director Joanne Hsu. "Note that interviews for this release were conducted between April 22 and May 13, closing two days after the announcement of a pause on some tariffs on imports from China."

She added, "Many survey measures showed some signs of improvement following the temporary reduction of China tariffs, but these initial upticks were too small to alter the overall picture - consumers continue to express somber views about the economy."

The unexpected dip by the headline index came as the current economic conditions index fell to 57.6 in May from 59.8 in April, while the index of consumer expectations edged down to 46.5 in May from 47.3 in April.

The report also said year-ahead inflation expectations surged to 7.3 percent in May from 6.5 percent in April, reaching the highest level since a matching figure in November 1981.

Long-run inflation expectations also climbed to 4.6 percent in May from 4.4 percent in April, reflecting a particularly large monthly jump among Republicans.

"The final release for May will reveal the extent to which the May 12 pause on some China tariffs leads consumers to update their expectations," said Hsu.

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