Consumer sentiment is at a rare low, even as jobs and housing activity show underlying fundamentals holding up better than the public mood suggests.
- Consumer sentiment is near historic lows, comparable to periods when interest rates topped 15%, even though today’s rates are far lower.
- Both the University of Michigan and Conference Board surveys show consumers pulling back from major purchases.
- Preliminary May consumer sentiment data from the University of Michigan fell again, signaling lingering pessimism.
- Spending has shifting toward “cheap thrills” like dining out, streaming services and pet care.
- Rising gasoline prices linked to the Iran conflict are a key driver of shaken confidence.
- Despite the gloomy mood, the broader economy is performing better than consumers seem to feel.
- GDP in 1st quarter rebounded from a weak 4th quarter, helped by government spending, AI‑related investment and steady consumer activity.
- Inflation remains stubbornly high, with PCE well above the Fed’s target, keeping rate cuts off the table.
- The labor market continues to hold up, with April job gains nearly double expectations and unemployment steady.
- The housing market is active but pressured. New construction and sales are rising, yet falling prices, higher mortgage rates and declining existing‑home values reflect ongoing affordability strains.
For more information on the state of the U.S. Economy, including forecasts, watch all the episodes of the Economy Express series.
