Consumer Sentiment Falls Near Record Low as Inflation Expectations Climb — Evening Brief – 05.22.26
U.S. consumer sentiment deteriorated further in May as households grappled with higher gasoline prices and mounting inflation concerns, even as a key leading economic gauge showed a slight improvement.
The University of Michigan’s final May Consumer Sentiment Index was revised down to 44.8 from an initial 48.2 reading, extending a three-month slide from April’s 49.8 print, according to the University of Michigan Survey of Consumers.
Year-ahead inflation expectations ticked up to 4.8% from 4.7% in April, well above the 3.4% reading in February 2026 before the Iran conflict and higher than any 2024 reading. Long-run inflation expectations climbed to 3.9% from 3.5% in April, breaking out of the 2.8% to 3.2% range observed throughout 2024.
“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,’’ Joanne Hsu, director of the survey, said.
The survey’s key components weakened alongside the headline index. The gauge of current economic conditions fell to 45.8 from a preliminary 47.8 and 52.5 in April, while consumer expectations dropped to 44.1 versus an initial 48.5 and 48.1 the prior month.
Separately, The Conference Board’s Leading Economic Index rose 0.1% month over month to 97.4 in April, beating expectations for a decline and improving from March’s 0.6% drop. Over the past six months, the index fell 0.7%, a milder contraction than the 1.0% decline in the prior six-month period.
The uptick was “driven mainly by a rebound in stock prices and an increase in building permits, only for two and more units,” said Justyna Zabinska-La Monica, senior manager, business cycle indicators, at The Conference Board. “The leading index rose in two of the past three months, but the gains did not offset the steep fall registered in March,” she added.
The Conference Board nudged its 2026 U.S. GDP growth forecast up to 1.7% from 1.6%. Its Coincident Economic Index rose 0.3% in April to 115.6, while the Lagging Economic Index gained 0.4% to 120.8.