The University of Michigan's Consumer Sentiment Index dropped to 44.8 in its final May reading, the lowest level ever recorded. This marks a steep decline from the preliminary figure of 48.2 and from April's final print of 49.8, representing three consecutive months of falling consumer confidence.
The Current Economic Conditions component fell to 45.8, while the Expectations component, measuring sentiment for the next six months, plunged to 44.1.
A staggering 57% of consumers reported that high prices were hurting their finances. Roughly one-third cited gasoline prices as a major stressor, while 30% specifically mentioned tariffs as a burden on household budgets.
Year-ahead inflation expectations edged down from 4.7% to 4.5%, and long-term expectations dropped to 3.4%. While consumers are slightly less worried about future price increases, they remain deeply pessimistic about current conditions.
Consumer spending accounts for roughly two-thirds of US GDP, so a sustained collapse in confidence has direct implications for economic growth. Geopolitical tensions, including issues around Iran and the Strait of Hormuz, continue to push energy prices higher, fueling the gasoline anxiety reported by a third of respondents.
For investors, Bitcoin has shown some resilience during similar sentiment dips earlier this year, suggesting a potential decoupling from traditional macroeconomic indicators.