Key Points
A University of Michigan survey released on Friday shows that U.S. consumer sentiment has fallen to a historic low in early May, driven by a surge in gasoline prices following the Iran conflict. Survey Director Joanne Hsu noted: "Overall, consumers continue to face cost pressures, with soaring fuel prices being a primary concern." According to data from the American Automobile Association (AAA), the national average for unleaded gasoline rose to $4.558 per gallon on May 7.
A price sign at a Shell gas station in downtown San Diego, California, on Monday, May 4, 2026. The preliminary reading of the closely watched University of Michigan Consumer Sentiment Index dropped to 48.2, a decline of 3.2% from April's previous record low and down 7.7% year-over-year. Economists surveyed by Dow Jones had expected a reading of 49.7. Persistent inflation concerns are the main driver behind the continued decline in confidence. The Current Conditions Index plunged by 9%, which Survey Director Joanne Hsu attributed to "consumers' heightened worries about personal finances and the high-cost environment for major purchases."
One-third of respondents cited gasoline prices as their top concern; Another third mentioned tariffs—both issues are linked to the Trump administration (military action against Iran in late February and the announcement of broad tariff policies in April 2025).
Director Hsu pointed out: "The situation in the Middle East is unlikely to significantly boost confidence until supply disruptions are fully resolved and energy prices retreat." A Faint Positive Signal in the Survey
The Expectations Index rose to 48.5, up 0.8% month-over-month and 1.3% year-over-year; Inflation expectations moderated slightly (though remaining elevated): the one-year outlook eased to 4.5% (down 0.2 percentage points) and the five-year outlook to 3.4% (down 0.1 percentage points).
Following the data release, the three major U.S. stock indices maintained their gains. Prior to this survey, the U.S. Bureau of Labor Statistics reported that April job growth exceeded expectations, with nonfarm payrolls adding 115,000 positions and the unemployment rate holding steady at 4.3%. However, soaring energy prices remain a challenge: the national average for regular gasoline reached $4.54 per gallon on Friday, up nearly 40 cents from the previous month and nearly $1.40 higher than a year ago.
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