Consumer sentiment falls in May as Americans' inflation expectations jump after tariffs

[BumRushDaShow]

Source: CNBC

Published Fri, May 16 202 510:08 AM EDT Updated 2 Min Ago


U.S. consumers are becoming increasingly worried that tariffs will lead to higher inflation, according to a University of Michigan survey released Friday. The index of consumer sentiment dropped to 50.8, down from 52.2 in April, in the preliminary reading for May. That is the second-lowest reading on record, behind June 2022.

The outlook for price changes also moved in the wrong direction. Year-ahead inflation expectations rose to 7.3% from 6.5% last month, while long-term inflation expectations ticked up to 4.6% from 4.4%.

However, the majority of the survey was completed before the U.S. and China announced a 90-day pause on most tariffs between the two countries. The trade situation appears to be a key factor weighing on consumer sentiment.

“Tariffs were spontaneously mentioned by nearly three-quarters of consumers, up from almost 60% in April; uncertainty over trade policy continues to dominate consumers’ thinking about the economy,” Surveys of Consumers director Joanne Hsu said in the release.

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Read more: https://www.cnbc.com/2025/05/16/consumer-sentiment-may-inflation-expectations-tariffs.html

[Aviation Pro]

1. Motherfucker's mouthpieces can try all they want to obfuscate the obvious

But consumers see the actual prices.

[Bengus81]

2. LOL...lead to?? Wally World just announced they are already going to raise prices

Yeah...I'd say 30% higher prices would lead to inflation. Oh wait...Trump claims those big ole' Corporations will be our buddies and eat those tariffs.

Oh sure they will,and....... FAFO

[UpInArms]

3. 90 day pause of what?

People plan their lives in more than 90 day blocks … in 90 days, you can change what? Buy a house? A car? Plan for college? The birth of a child?

90 days is a bullshit timeline for any future plan

[IronLionZion]

4. Are we going to have Trump "I did that" stickers on everything?

[progree]

5. "A final consumer sentiment index for the month is slated to be released on May 30, and will likely be closely watched

A final consumer sentiment index for the month is slated to be released on May 30, and will likely be closely watched to see if the tariff pause led to an improvement in sentiment.

So, 2 weeks from now. Also, on May 30, the PCE inflation report comes out -- this is the Fed's favorite inflation gauge (particularly the core part of it). It's likely to be quite tame, given that the April reading of the CPI was 0.22%, (Core CPI 0.24%), PPI: --0.47%, (Core PPI --0.11%), these are all April over March numbers. My understanding is that the PPI factors into PCE inflation (PPI is Producer Price Index aka wholesale prices).

I'm using double minuses for minuses to make them stand out better.

I'm not a fan of PCE inflation because it fully takes substitution into account, i.e. if a lot of consumers switch from steaks and beef to turkey necks, this shows up as a reduction in meat prices. I have no use, nor do I have any interest in such a price index. Unfortunately, the Fed loves it because, in inflationary times, it comes out lower than the CPI (making it look like they are making more progress on inflation than they really are), and they can all easily afford steaks morning, noon, and night.