In May, U.S. consumer sentiment fell to May's near-historical record, which is inflation concerns, tariff uncertainty

Sentiment among American consumers continues to decline as American expectations for future inflation grow, and fears about the impact of President Donald Trump's tariffs.

The University of Michigan survey of consumers released its Consumer Sentiment Index on Friday, which dropped to 50.8 in its initial reading in May after a final reading of 52.2 in April. Economists who voted by Reuters expect the index to rise to 53.4.

The latest figures have dropped consumer sentiment by 30% after five months of decline in January 2025. The 50.8 reading is the second highest reading in the following records, namely June 2022, a month after the recent inflation cycle peaked.

"Nearly three-quarters of consumers spontaneously mentioned tariffs, up from nearly 60% in April; uncertainty about trade policy continues to dominate consumers' thinking about the economy," said the survey by Consumer Director Joanne HSU.

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For the fifth straight month in May, consumer sentiment declined.

The investigation ended two days after Trump announced a deal with China, temporarily reducing tariffs for 90 days and reducing taxes on Chinese goods from 145% to 30%, while Chinese tariffs on U.S. exports from 125% to 20%.

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Temporary tariffs are intended to provide negotiation time for long-term agreements.

"Many of the investigation measures have shown some signs of improvement after temporarily lowering Chinese tariffs, but these initial rises are too small to change the overall situation - consumers continue to express their melancholy views on the economy," HSU noted.

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Fed Chairman Jerome Powell said central banks will monitor signs of price increases caused by tariffs.

The report said the current assessment of personal finance has dropped almost 10% due to weaker income.

Consumer expectations for inflation in the previous year increased to 7.3% this month, up from 6.5% in April. The increase occurred among the Democrats and Republicans surveyed. The 7.3% year-on-year inflation outlook is the highest since April 1981.

Long-term inflation expectations in May also rose to 4.6% from 4.4% a month ago, as Republican respondents grew significantly.

Original article source: In May, U.S. consumer sentiment fell to May's near-historical record, which is inflation concerns, tariff uncertainty