United States consumer sentiment fell to a fresh record low in May as households grew increasingly concerned that the conflict involving Iran and elevated oil prices would drive inflation higher and weigh on the broader economy.
The University of Michigan’s Surveys of Consumers said Friday that its consumer sentiment index declined to 44.8 from a preliminary reading of 48.2 and was sharply lower than the 49.8 level recorded at the end of April.
The latest result marked the third straight monthly decline in sentiment and pushed the index below the previous historic low reached in June 2022, when surging inflation and fuel costs severely pressured household confidence.
“Consumer sentiment fell for the third straight month as supply disruptions in the Strait of Hormuz continue to boost gasoline prices. Sentiment is now just below the previous historical trough seen in June 2022,” Surveys of Consumers Director Joanne Hsu said in a statement.
“Critically, consumers appear worried that inflation will increase and proliferate beyond fuel prices, even in the long run.”
The deterioration in confidence comes as the ongoing conflict in the Middle East continues to disrupt energy markets and keep oil prices elevated, intensifying concerns over the cost of living.
The Strait of Hormuz, a key global shipping route for crude oil and liquefied natural gas, has remained a major focus for markets amid fears of supply disruptions.
Consumer inflation expectations also continued to rise during May.
One-year inflation expectations increased to 4.8% from 4.7% in April and were substantially above the 3.4% level recorded in February before the conflict escalated.
Longer-term inflation expectations rose to 3.9% from 3.5% the previous month, suggesting consumers increasingly believe inflation pressures could persist over an extended period.
Financial markets have experienced heightened volatility in recent weeks as investors assess both the likelihood of a resolution to the conflict and the economic consequences of prolonged high energy prices.
Bond yields have climbed sharply amid concerns that inflation could remain elevated and limit the Federal Reserve’s flexibility to ease monetary policy.
The yield on the 30-year U.S. Treasury bond rose to its highest level since before the global financial crisis last week, while the benchmark 10-year Treasury yield also reached levels not seen in more than a year.
The Federal Reserve has also signalled it is becoming more cautious about reducing interest rates while inflation risks remain elevated.
Federal Reserve Governor Christopher Waller said on Friday that rising medium-term inflation expectations were becoming a concern for policymakers.
“While measures of longer-term inflation expectations are still relatively low and appear well anchored, some expectations from one to five years ahead have moved up since the beginning of 2026, which I find concerning,” Waller said in a speech Friday.
