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The University of Michigan's consumer sentiment index fell to an all-time low in May, driven by surging gasoline prices linked to supply disruptions in the Strait of Hormuz and deepening concern that inflation will spread well beyond fuel costs.
At 44.8, the final May figure marked a new record, sliding from 49.8 in April and coming in beneath the month's preliminary estimate of 48.2 — a drop of 10% from the prior month and 14.2% from a year earlier. Records were broken across the board: the current economic conditions gauge settled at 45.8 and the expectations component at 44.1, with each reaching its lowest point in the survey's history.
"The cost of living continues to be a first-order concern, with 57% of consumers spontaneously mentioning that high prices were eroding their personal finances, up from 50% last month," Joanne Hsu, director of the university's Surveys of Consumers, said in a statement. "Critically, consumers appear worried that inflation will increase and proliferate beyond fuel prices, even in the long run."
On the inflation expectations front, the one-year outlook ticked up to 4.8% from April's 4.7%, while the longer-range measure — spanning five to ten years — jumped to 3.9% from 3.5%, a seven-month high, according to Bloomberg. Both readings are well above the 2.8% to 3.2% range seen throughout 2024.
