American consumer sentiment has hit an all-time low. The University of Michigan’s Index of Consumer Sentiment fell to 44.8 in its final May reading-the lowest since the survey began in 1952. That marks a 10% drop from April’s already weak 49.8, and it came in well below the preliminary estimate of 48.2.
Both components of the index deteriorated sharply. The Current Economic Conditions gauge dropped 12.8% to 45.8, while the Index of Consumer Expectations fell 8.3% to 44.1.
Survey director Joanne Hsu reported that 57% of respondents said high prices were negatively impacting their personal finances, up from 50% in April. Surging gas prices, tied to supply disruptions in the Strait of Hormuz, are a major driver. The steepest declines were among lower-income households and those without college degrees.
Inflation expectations are climbing. Year-ahead expectations rose to 4.8%, while long-run expectations hit 3.9%-well above the Federal Reserve’s 2% target.
Independents and Republicans reported record-low confidence in the current administration, while Democrats remained stable.
Meanwhile, Bitcoin continues to rally alongside the Nasdaq, seemingly decoupled from consumer pain. Consumer spending accounts for roughly two-thirds of US GDP. If this sentiment translates into a spending pullback, corporate revenue could take a hit.