U.S. Consumer Confidence in May Hits Record Low as High Oil Prices and Tariff Concerns Continue to Pressure

As the Middle East conflict continues to drive up energy prices, American consumer confidence declined further this month, hitting a new all-time low.

The latest survey released by the University of Michigan on Friday shows that the preliminary May Consumer Sentiment Index fell to 48.2, the lowest level recorded since 1952, compared to an expected value of 49.5.

Just last month, this indicator had already dropped to a historic low, even below the levels seen during the 2008 global financial crisis, the COVID-19 pandemic, and the subsequent high inflation period.

The survey indicates that the current conditions index, which reflects the current economic situation, plummeted by 9%. Joanne Hsu, director of the Michigan Consumer Survey, said this was mainly due to a significant increase in consumer concerns over high prices, whether regarding personal finances or the ability to purchase large items, both facing greater pressure.

Hsu stated, “About one-third of consumers explicitly mentioned gasoline prices, and around 30% mentioned tariffs. Overall, consumers still feel the ongoing impact of cost pressures, with soaring oil prices being the main driving factor.” All these issues are related to Trump—who launched military action against Iran in late February this year and announced a series of aggressive tariff measures in April 2025.

She added, “Until supply disruptions are thoroughly resolved and energy prices fall back, it is unlikely that developments in the Middle East will significantly boost consumer confidence.”

Overall, U.S. consumers’ inflation expectations eased slightly last month: the expected inflation rate over the next year decreased from 4.7% last month to 4.5% this month; the long-term inflation expectation slightly declined from 3.5% in April to 3.4% in May.

Gasoline prices have long been a key factor influencing Americans’ economic perceptions. Currently, the national average gasoline price in the U.S. has remained above $4 per gallon for several consecutive weeks. Meanwhile, global energy prices remain high due to the ongoing closure of the Strait of Hormuz. The Strait of Hormuz is a critical global energy transit route, accounting for about 20% of the world’s oil and a large volume of other bulk commodities.

However, despite consumer confidence falling to a record low, this may not necessarily lead to a significant slowdown in consumer spending. Consumer spending accounts for about two-thirds of the U.S. economy. In recent years, consumer sentiment has deteriorated multiple times but has not substantially weakened spending performance. For example, in 2022, when U.S. inflation reached its highest in 40 years, and last year when Trump announced large-scale tariffs, consumption still remained resilient.

A key reason why American consumers continue to spend despite feeling pessimistic about the economic outlook is that the U.S. labor market remains robust.

Although the pace of hiring has noticeably slowed compared to the post-pandemic economic recovery phase, the scale of layoffs has not increased significantly, keeping the unemployment rate stable. The latest employment data released on Friday shows that the U.S. unemployment rate remained at 4.3% in April; at the same time, 115k non-farm jobs were added that month, far exceeding market expectations.

(Article source: Caixin Global)