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U.S. consumer sentiment deteriorated sharply, with the University of Michigan’s consumer sentiment index falling to 48.2 points—the lowest level since the survey began in 1952. The index had already dropped to a record low in April, falling below levels seen during major downturns including the 2008–2009 recession, the COVID-19 pandemic, and the period of subsequent inflation.
Joanne Hsu, director of the University of Michigan’s Survey of Consumer Attitudes, said about one-third of consumers pointed to gasoline prices as a key reason for becoming more pessimistic, while roughly 30% cited tariffs.
Hsu added that developments in the Middle East are unlikely to meaningfully improve sentiment until supply disruptions are fully resolved and energy prices decline. She noted that gasoline prices strongly shape Americans’ views of the economy, and the nationwide average regular gasoline price has remained above $4 per gallon for several weeks.
The article attributes the elevated gasoline prices to high global energy costs, linked to the Hormuz Strait remaining closed.
Oren Klachkin, an economist at Nationwide, said the contrast between investor optimism—supported by an AI-fueled rally in U.S. stocks—and consumer sentiment is widening. He argued that a recovery in consumer sentiment is difficult to envision “at least until oil prices start to fall sustainably.”
Despite the record-low sentiment reading, the article notes that this does not necessarily translate into weaker consumer spending, which accounts for about two-thirds of the U.S. economy. It points out that declines in sentiment in recent years have not always reduced spending—for example, in 2022 when inflation was at its highest in 40 years, and last year when President Trump imposed broad tariffs.
One factor cited is the relative stability of the U.S. labor market. While hiring has slowed compared with the years after the pandemic, layoff numbers have not risen beyond normal levels, helping keep unemployment low.
Latest jobs data show unemployment at 4.3% in April, with employers adding 115,000 nonfarm payrolls, a figure above forecasts.
The article suggests consumers may be adjusting spending patterns even if they are not cutting spending outright. It highlights that higher gasoline prices take a larger share of income and that tariffs are pushing up prices of some goods.
It also reports that the Michigan index of current economic conditions fell 9% in early May to 47.8, reflecting concerns about the impact of higher prices on personal finances and big-ticket purchases.
The weaker sentiment has begun to show up in parts of the consumer goods sector. Whirlpool, a major appliance maker, missed analysts’ expectations in its first-quarter earnings report released last week. The stock fell as much as 20% following the report.
In an interview, Whirlpool Chief Financial Officer Roxanne Warner said demand for household appliances has fallen to recession-like levels, attributing the decline to deteriorating consumer sentiment. She said the household appliance industry has seen sales drop around 7.4%, describing it as the sharpest decline since the financial crisis.
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