University of Michigan Preliminary Consumer Sentiment Index Released for May 2022; Erases April’s Gains

The University of Michigan today (5-13-22) released its preliminary Consumer Sentiment Index (CSI) for May. The Index of Consumer Sentiment dropped to a reading of 59.1, down from April’s reading of 65.2; this is a month-over-month decrease of -9.4% and down -28.7% year-over-year (82.9 in May 2021).

The Current Economic Conditions fell to a reading of 63.6 May, down from 69.4 in April; this is a month-over-month decrease of -8.4% and down -28.9% year-over-year (89.4 in May 2021).

Finally, the Index of Consumer Expectations declined to a reading of 56.3 in May, down from 62.5 in April; this is a month-over-month decrease of -9.9% and down -28.9% year-over-year (89.4 in May 2021).

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

“Consumer sentiment declined by 9.4% from April, reversing gains realized that month. These declines were broad based—for current economic conditions as well as consumer expectations, and visible across income, age, education, geography, and political affiliation—continuing the general downward trend in sentiment over the past year. Consumers’ assessment of their current financial situation relative to a year ago is at its lowest reading since 2013, with 36% of consumers attributing their negative assessment to inflation. Buying conditions for durables reached its lowest reading since the question began appearing on the monthly surveys in 1978, again primarily due to high prices.

The median expected year-ahead inflation rate was 5.4%, little changed over the last three months, and up from 4.6% in May 2021. The mean was considerably higher at 7.4%, reflecting substantial variation in price changes across types of goods and services, and in household spending patterns. At the same time, long term inflation expectations remain well-anchored with a median of 3.0%, settling within the 2.9 to 3.1% range seen over the last 10 months.”