But a survey shows the latest decline was less than in previous months
of ConsumerAffairsMay 16, 2025
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Consumer sentiment dipped slightly in May, marking a nearly 30% decline since January 2025.
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Worsening personal finances and political divisions contributing to the ongoing pessimism.
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Tariffs and trade policy dominate consumer concerns, with nearly 75% of respondents mentioning tariffs
After months of deteriorating confidence, American consumers are showing few signs of optimism. The latest reading from the University of Michigans Surveys of Consumers reveals that consumer sentiment fell slightly in May, nudging down by 1.4 index points following four straight months of steep declines. While the drop may seem modest, sentiment has now plummeted nearly 30% since the start of 2025a staggering erosion in just five months.
The sentiment slump isnt merely a statistical footnote. It reflects deep and widespread concern among consumers, who remain increasingly anxious about personal finances, income stability, and the broader economic outlook.
Politics and personal finances
The minimal change in sentiment conceals stark political divides. Independents reported a slight uptick in confidence, but that was overshadowed by a sharp 7% decline among Republicans. According to Joanne Hsu, Director of the Surveys of Consumers, these opposing shifts effectively canceled each other out, leaving the headline index nearly flat.
However, one area saw a pronounced deterioration: assessments of current personal finances. That component of the index dropped by nearly 10%, largely driven by reports of weakening incomes. As wages stagnate and prices remain high, more Americans are feeling the squeeze in their household budgets, Hsu said.
Trade policy is emerging as a dominant concern for consumers. Nearly 75% of respondents spontaneously mentioned tariffs in the latest surveyup from 60% just a month ago. Much of this anxiety centers on U.S.-China trade relations. Interviews for the May data were conducted from April 22 through May 13, capturing public reaction to a recent pause on some tariffs affecting Chinese imports.
While some consumers reported modest optimism following the May 12 tariff pauseechoing a similar, minor bump after an April 9 partial rollbackthese small gains failed to reverse the broader trend of gloom. Consumers continue to express somber views about the economy, Hsu noted, indicating that the initial relief was insufficient to spark a real shift in outlook.
Inflation expectations
Further darkening the mood are rising inflation expectations. The year-ahead inflation forecast jumped to 7.3% in May, up sharply from 6.5% in April. This increase cut across political lines, affecting both Democratic and Republican respondents.
Long-term inflation expectations also edged higherfrom 4.4% last month to 4.6% in Maydriven largely by a substantial upward revision among Republicans. Whether the May 12 tariff pause will meaningfully alter these inflation views remains to be seen, with the final data release for May expected to provide more insight.
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