University of Michigan Releases Preliminary Results of Its Consumer Sentiment Index for May

On Friday, the University of Michigan released the preliminary results of its Surveys of Consumers for May.

• The Index of Consumer Sentiment declined to a reading of 50.8 in May, down from 52.2 in April. This is a month-over-month decline of 2.7% and a 26.5% decrease year-over-year (69.1 in May 2024).
• Current Economic Conditions declined to 57.6 in May, down from 59.8 in April. This is a 3.7% month-over-month decline and 17.2% lower than a year ago (69.6 in May 2024).
• The Index of Consumer Expectations declined to 46.5 in May, down from 47.3 in April. This is a month-over-month decrease of 1.7% and down 32.4% from May 2024 (68.8).

In remarks accompanying the report, Surveys of Consumers Director Joanne Hsu said:

“Consumer sentiment was essentially unchanged this month, inching down a scant 1.4 index points following four consecutive months of steep declines. Sentiment is now down almost 30% since January 2025. Slight increases in sentiment this month for independents were offset by a 7% decline among Republicans. While most index components were little changed, current assessments of personal finances sank nearly 10% on the basis of weakening incomes. Tariffs were spontaneously mentioned by nearly three-quarters of consumers, up from almost 60% in April; uncertainty over trade policy continues to dominate consumers’ thinking about the economy. Note that interviews for this release were conducted between April 22 and May 13, closing two days after the announcement of a pause on some tariffs on imports from China. Many survey measures showed some signs of improvement following the temporary reduction of China tariffs, but these initial upticks were too small to alter the overall picture—consumers continue to express somber views about the economy. The initial reaction so far echoes the very minor increase in sentiment seen after the April 9 partial pause on tariffs, despite which sentiment continued its downward trend.

Year-ahead inflation expectations surged from 6.5% last month to 7.3% this month. This month’s rise was seen among Democrats and Republicans alike. Long-run inflation expectations lifted from 4.4% in April to 4.6% in May, reflecting a particularly large monthly jump among Republicans. The final release for May will reveal the extent to which the May 12 pause on some China tariffs leads consumers to update their expectations.”