US consumer sentiment continues to fall amid increasing worry over the changing trade policies and growing inflation.
A survey conducted by the University of Michigan revealed that consumer sentiment dropped by 2.7% to 50.8 in May, from 52.2 in April. The consumer sentiment in May plunged by 26.5% year-over-year.
There was a significant worry over new trade policies, with nearly 75% of respondents spontaneously mentioning tariffs.
Major retailers, including Walmart, are beginning to warn customers about potential price increases due to tariffs.
Joanne Hsu, director of surveys of consumers at the University of Michigan, said: “Uncertainty over trade policy continues to dominate consumers’ thinking about the economy.
“The initial reaction so far echoes the very minor increase in sentiment seen after the April 9 partial pause on tariffs, despite which sentiment continued its downward trend.”
The index of current economic conditions inched down from 59.8 in April to 57.6 in May, showing increasing worry over the changing macroeconomic environment.
Additionally, consumer expectations for the future reduced from 47.3 in April to 46.5 in May, marking a 32.4% year-over-year change.
American consumers’ inflation expectation went up from 6.5% in April to 7.3% in May.
The survey was conducted two days before the 90-day pause on increasing tariffs between China and the US was announced, which has provided temporary relief to retailers and shoppers.
However, a recent study revealed that US retail sales remained steady in April despite the dropping consumer sentiment.
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