University of Michigan Final Consumer Sentiment Index Declines for May 2022, Erasing All of April’s Gains

The University of Michigan today (Friday 5-27-22) released its final Consumer Sentiment Index (CSI) for May. The Index of Consumer Sentiment dropped to a reading of 58.4, down from April’s reading of 65.2. This is a month-over-month decrease of -10.4% and down -29.6% year-over-year (82.9 in May 2021).

The Current Economic Conditions fell to a reading of 63.3 May, down from 69.4 in April. This is a month-over-month decrease of -8.8% and down -29.2% year-over-year (89.4 in May 2021).

Finally, the Index of Consumer Expectations declined to a reading of 55.2 in May, down from 62.5 in April. This is a month-over-month decrease of -11.7% and down -29.9% year-over-year (89.4 in May 2021).

In remarks and analysis prepared to accompany the release, Joanne Hsu, Director of Surveys for the University of Michigan, said:

The final May reading confirmed the early month decline in consumer sentiment, which fell 10.4% below April and reverted to virtually the same level of sentiment seen in March. This recent drop was largely driven by continued negative views on current buying conditions for houses and durables, as well as consumers’ future outlook for the economy, primarily due to concerns over inflation. At the same time, consumers expressed less pessimism over future prospects for their personal finances than over future business conditions. Less than one quarter of consumers expected to be worse off financially a year from now.

Looking into the long term, a majority of consumers expected their financial situation to improve over the next five years; this share is essentially unchanged during 2022. A stable outlook for personal finances may currently support consumer spending. Still, persistently negative views of the economy may come to dominate personal factors in influencing consumer behavior in the future.