May’s final reading of 44.8 marks the lowest consumer sentiment level in modern history, driven by persistent high prices and rising gasoline costs.
The University of Michigan’s Index of Consumer Sentiment plunged to 44.8 in May, its lowest level in the survey’s modern history, as 57% of respondents cited high prices as the primary driver of financial strain. The reading fell 10.0% from April and 14.2% year-over-year, extending a three-month decline.
Despite the collapse in sentiment, April retail sales reached $757.1 billion, up 0.5% from March, though motor vehicle outlays dropped $9 billion. Analysts warn that rising gasoline prices, linked to supply disruptions in the Strait of Hormuz, could further erode household spending.
Investors are now focused on June 12’s inflation-expectations data, with long-run expectations at 3.9%, limiting the Federal Reserve’s ability to cut rates in the near term.