Consumer Sentiment Falls for Third Straight Month as Supply Disruptions Weigh on Outlook

The University of Michigan Consumer Sentiment Index fell for the third straight month in May 2026, dropping to 44.8. That puts it below the low point from June 2022, which was the worst reading since the 2008 financial crisis. Supply disruptions in the Strait of Hormuz and a new wave of gas price hikes are behind the decline.

The Headline Numbers

All three of the survey's main indices fell in May:

• Index of Consumer Sentiment: 44.8 (down from 49.8 in April)
• Current Economic Conditions: 45.8 (down from 52.5)
• Index of Consumer Expectations: 44.1 (down from 48.1)

Readings this low have historically lined up with periods where consumers felt serious financial strain. The last time we saw numbers like these was the inflation spike in the middle of 2022.

Inflation Expectations

Year-ahead inflation expectations inched up from 4.7% to 4.8% in May. That is well above the 3.4% recorded in February 2026, before the Iran conflict started. Long-run inflation expectations moved up too, climbing from 3.5% in April to 3.9% in May. For reference, long-run expectations stayed between 2.8% and 3.2% throughout 2024.

The jump in long-run expectations matters because it hints that consumers are starting to doubt inflation will be brought under control. The shift was biggest among Republicans and independents. Among Republicans, long-run inflation expectations are now more than double what they were in February 2025.

Gas Prices

Nearly 40% of consumers brought up gas prices during their interviews without being asked, up from 33% in April. Gas prices rose another 12% during May's survey window. A brief dip in late April didn't last. Three months into the Iran conflict, consumers look increasingly convinced that supply problems are not going away soon.

Cost of Living

57% of consumers said high prices are eroding their personal finances, up from 50% in April. That is more than half of everyone surveyed mentioning it on their own. The declines were steepest for lower-income households and people without college degrees, which makes sense since those groups feel price hikes on gas and essentials the most.

Wealth Gap in Sentiment

The report shows a growing split between people who own stocks and those who don't. Consumers with the largest stock holdings reported sentiment at least 33% higher than every other group. About 60% of middle and lower wealth consumers said high prices are hurting their living standards, compared to less than half of the wealthiest group. Rising equity values appear to be cushioning higher-wealth consumers in a way that others don't benefit from.

Labor Market

Labor market expectations have not gotten much worse in 2026, which is about the only part of the survey that held steady. Still, roughly 65% of consumers expect unemployment to rise in the year ahead. Real income expectations kept sliding as inflation expectations rose. 71% now expect price hikes to outstrip income gains, up from 66% in April.

Partisan Divide

Independents and Republicans both hit their lowest sentiment readings of the current administration. Sentiment among Democrats was mostly flat from the prior month. The gap between parties on long-run inflation expectations grew, driven mostly by Republican and independent respondents.

Why This Matters

Consumer sentiment is a leading indicator. When people feel uneasy about the economy, they tend to spend less. Less spending can slow the economy further, which then feeds back into more pessimism. Right now sentiment is falling, inflation expectations are rising, and most consumers say their finances are being squeezed. That combination is worth watching.

The Survey of Consumers has tracked these trends for over 75 years. It is one of the longest running and most widely cited measures of consumer attitudes in the United States.