US Consumer Sentiment at 5-Month High

The University of Michigan’s Consumer Sentiment Index dropped to a record low of 48.2 in early May 2026, missing market expectations of 49.5 and falling below April’s 49.8. The current conditions component declined about 9% to 47.8, driven by growing concerns over high prices affecting personal finances and buying conditions for major purchases. Meanwhile, the expectations index edged up to 48.5, though real income expectations continued their decline from March. About one-third of consumers spontaneously cited gasoline prices, and roughly 30% mentioned tariffs, underscoring that consumers still feel pressured by rising costs, particularly at the pump. Year-ahead inflation expectations eased slightly to 4.5% from 4.7%, while long-run inflation expectations dipped to 3.4% from 3.5%.

The University of Michigan’s Consumer Sentiment Index was revised up to 49.8 in April 2026 from an initial estimate of 47.6, according to final data. Despite the slight improvement, this remains the weakest reading on record, reflecting the heavy toll of the Iran conflict on consumer morale. Sentiment declined across all demographics, regardless of political affiliation, income, age, or education. Expectations for business conditions deteriorated for both the short and long term, nearly matching levels seen a year ago when reciprocal tariffs were introduced. While the two-week ceasefire and a slight dip in gasoline prices helped sentiment recover a fraction of its early-month losses, the conflict’s primary impact on consumers stems from energy and broader price shocks. Inflation expectations surged, with year-ahead expectations jumping to 4.7% from 3.8%, the largest one-month increase since April 2025, while long-term expectations climbed to 3.5%, the highest since October 2025.

The University of Michigan’s Consumer Sentiment Index plummeted 11% to a historic low of 47.6 in early April 2026, far below both market expectations of 52 and last year’s level by 9%. Nearly all surveys (98%) were conducted before the temporary cease-fire announcement, underscoring the Iran conflict’s immediate impact on confidence. Sentiment declined across all demographics, as well as every index component, signaling a broad-based drop. One-year business condition expectations crashed 20%, while assessments of personal finances fell 11%, with consumers citing rising prices and shrinking asset values as key concerns. Buying conditions for durables and vehicles deteriorated further, again due to high costs linked to the war. Year-ahead inflation expectations spiked to 4.8% from 3.8% in March, the largest one-month jump since April 2025, while long-term inflation expectations rose to 3.4%, the highest since November 2025.