Consumer sentiment falls to fresh record low in May as surging gas prices hit outlook

Surging gas prices due to the Iran war sent consumer sentiment to a new low in the early part of May, according to a University of Michigan survey Friday.

The school's closely watched Survey of Consumers posted a 48.2 preliminary reading, down 3.2% from April's prior record swoon and off 7.7% from a year ago. Economists surveyed by Dow Jones had been looking for 49.7.

Inflation fears were the primary driver of the continued trend lower in consumer attitudes.

The trend, which also saw the current conditions index tumble 9%, is “owing to a surge in concerns about high prices both for personal finances as well as buying conditions for major purchases,” the survey's director, Joanne Hsu, said.

One-third of respondents mentioned gas prices as the biggest cause of concern. However, another one-third also cited tariffs — both connected to President Donald Trump, who launched an attack on Iran in late February and announced an aggressive slate of tariffs in April 2025.

“Taken together, consumers continue to feel buffeted by cost pressures, led by soaring prices at the pump,” Hsu said. “Middle East developments are unlikely to meaningfully boost sentiment until supply disruptions have been fully resolved and energy prices fall.”

There were a couple modest bright sides in the survey.

The expectations index came in at 48.5, a 0.8% increase from April and up 1.3% from a year ago. Also, the inflation outlook actually eased a bit though still at elevated levels, with the one-year projection at 4.5% and the five-year at 3.4%, respectively down 0.2 percentage point and 0.1 percentage point from prior readings.

Stock indexes held positive after the release.

The survey was released just after the Bureau of Labor Statistics reported that job creation was stronger than expected in April, with nonfarm payrolls rising by 115,000 and the unemployment rate holding at 4.3%.

However, soaring energy prices continued to be a problem. A gallon of regular gas averaged $4.54 nationally on Friday, up nearly 40 cents from a month ago and higher by nearly $1.40 from the same time a year ago, according to AAA.