Key Takeaways

• Record low sentiment: The University of Michigan’s Consumer Sentiment Index plunged to an all-time low of 44.8 in May, down from 48.2 earlier in the month and 49.8 in April.
• Missed expectations: Economists had forecast no change from the preliminary 48.2 reading.
• Gasoline the culprit: Surging pump prices driven by the Iran war are the primary driver of consumer anxiety.
• 57% cite high prices: More than half of consumers spontaneously mentioned that elevated prices were eroding their personal finances — up from 50% last month.
• Partisan sentiment collapse: Both independents and Republicans saw their sentiment fall to the lowest readings of the current presidential administration.
• Near-term inflation fears rise: One-year inflation expectations climbed to 4.8% from 4.7% in April.
• Long-term inflation alarm: Five-year inflation expectations surged to 3.9% from 3.5% — a significant jump signaling entrenched price pessimism.

U.S. consumer sentiment plunged to a record low in May as surging gasoline prices caused by the war with Iran fueled anxiety over worsening affordability, a closely watched survey showed on Friday.

The University of Michigan’s Surveys of Consumers said its Consumer Sentiment Index dropped to a final reading of 44.8 — an all-time low — from 48.2 earlier this month. The index stood at 49.8 in April. Economists polled by Reuters had forecast the index to remain unchanged at 48.2.

“The cost of living continues to be a first-order concern, with 57% of consumers spontaneously mentioning that high prices were eroding their personal finances, up from 50% last month,” said Joanne Hsu, director of the Surveys of Consumers. “Independents and Republicans saw decreases in sentiment, with both groups reaching their lowest readings of the current presidential administration.”

The survey’s measure of consumer expectations for inflation over the next year rose to 4.8% from 4.7% in April. Consumers’ expectations for inflation over the next five years shot up to 3.9% from 3.5% last month — a notable jump that signals deepening concern about the persistence of price pressures.