U.S. consumers are not feeling great these days. After a popular University of Michigan survey last week showed consumer sentiment falling to a record low, a survey released Tuesday by the Conference Board also shows that the economic mood declined this month, though not as severely.
“Consumer confidence edged downward in May as the inflationary impacts of the war in the Middle East intensified,” said Dana M. Peterson, the organization’s chief economist.
The Conference Board Consumer Confidence Index slipped 0.7 points to a reading of 93.1 (based on a scale in which the level for 1985 is 100). The index has been on a gradual downward trend since hitting highs of around 130 before the Covid pandemic, but it’s still nowhere near the 25-year low recorded during the 2008-2009 recession.
Consumers in the survey cited rising oil and gas prices as a major concern, as well as war and geopolitics. Two-thirds of respondents said they are cutting back on spending due to high prices, with most reporting that they are buying fewer items and delaying major purchases. The outlook on the job market, on the other hand, remained positive overall, with more people continuing to say that jobs are plentiful than saying they are hard to get.
The survey also provides some evidence supporting the thesis that a K-shaped economy — marked by starkly different trajectories for different levels of wealth and income — is affecting the economic mood. Households earning more than $100,000 a year reported higher levels of confidence, while most other groups saw declines.
The bottom line: U.S. consumers aren’t happy with the economy right now, and high gas prices and the Iran war are playing a major role. The University of Michigan survey, which focuses on personal financial conditions, shows a record drop in sentiment. The Conference Board survey is showing a less dramatic drop-off, though that may be due to the survey’s emphasis on the conditions in the labor market, which has shown signs of resilience despite the threats to the economy from tariffs, war and inflation over the last year.