According to the finalized survey from the University of Michigan, consumer sentiment in the United States held steady. For May, the composite index’s final reading is 52.2, unchanged from last month’s score. The survey, open through May 26, underscores the persistent alarm among Americans regarding U.S. trade negotiations, particularly with China. It pushes back on recent court decisions affecting tariffs that have been imposed by former President Donald Trump.
The positive outlook reads too. The survey’s forward-looking index of expectations for business conditions, employment, and income had a small increase compared to April. This index is still far below—down 30.4%—compared to the same month a year ago. The University of Michigan has said that this floor is equal to April’s. It’s the fourth-lowest consumer sentiment level ever recorded going back to 1952. Strikingly, this number is less than all of the corresponding numbers counted during the Great Recession.
Joanne Hsu, the director of the survey, remarked, “Consumers see the outlook for the economy as no worse than last month, but they remained quite worried about the future.” This sentiment speaks to the continuing ambiguity about the state of the economy.
The survey fails to take into account the recent evolution of trade policies. This includes a recent court ruling that found Trump’s use of emergency powers to institute massive tariffs unlawful. Though this administration won its appeal to reinstate these tariffs temporarily, looming unique still rules consumer started today. As Tom Bruce, macro investment strategist at Tanglewood Total Wealth Management, said, “This market is all about uncertainty. He thinks it’s prudent to be a little skeptical about economic forecasts and rising borrowing costs.
These survey results are good news and point to consumer sentiment being stable in May. At the same time, Americans report the highest levels of concern over achieving economic security. At the start of the month, preliminary estimates indicated that sentiment got a little worse before leveling off again at the end of May. Bruce noted, “It’s always an encouraging sign to have better sentiment data, but what really matters is consumer spending—and there’s still a segment of the population with capacity to spend because of asset prices.”
In addition to consumer sentiment, expectations for inflation appeared more modest in May compared to previous months, signaling a potential shift in consumer outlook. Bruce further elaborated on the ongoing economic climate: “We still have a very strong wealth effect going on throughout the economy for those who own assets.”
Austan Goolsbee just gave us some insight into the tariffs-consumer confidence relationship. He stated, “If on the backend of this thing either we don’t put the tariffs in or they reach some deals that allow us to avoid doing that, we could go back to what we were prior to April 2.” He expressed optimism regarding interest rates if stable employment and target inflation are achieved: “If you have stable full employment and inflation going to target, rates can come down to where they would eventually settle.”
Consumers are trying to find their way through a confusing set of economic signals. Even with lingering doubt about ongoing trade talks and domestic policy actions, they’re operating with a cautious optimism. The Michigan state survey captures some of these nuances, showing how international events and related developments influence consumer sentiment and perceptions of the broader economy.