1 hour ago
22
Americans haven’t felt this pessimistic about the economy since Eisenhower was in the White House. And technically, they feel worse now than they did back then.
The University of Michigan’s Consumer Sentiment Index dropped to a final reading of 44.8 in May, down from an already grim preliminary figure of 48.2 and April’s 49.8. That makes it the lowest level ever recorded since the survey launched in the 1950s, which is saying something given the recessions, oil crises, and financial meltdowns that have happened in the decades since.
What’s driving the collapse in confidence
Roughly one-third of survey respondents pointed to high gasoline costs as a primary concern, with prices reportedly surpassing $4.50 per gallon. Those elevated fuel costs are tied to geopolitical tensions with Iran and supply disruptions in the Strait of Hormuz, a chokepoint that handles a significant share of global oil traffic.
Nearly 30% of respondents also flagged tariffs as a source of anxiety.
A full 57% of consumers said high prices were a major factor eroding their personal finances.
Inflation expectations have climbed accordingly. Year-ahead projections rose to 4.8% in the final survey reading, while longer-term expectations pushed up to 3.9%.
The pain isn’t distributed evenly, either. Lower-income households and those without a college education reported the steepest drops in sentiment.
Three straight months of decline
May’s reading marks the third consecutive monthly decline in consumer sentiment. The index sat at 49.8 in April, meaning May’s final number represents roughly a 10% decline in a single month. The preliminary May reading of 48.2 had already looked bad. The final number was meaningfully worse, suggesting that sentiment continued to deteriorate as the month progressed.
What this means for crypto and risk assets
Crypto-focused analysts have noted an interesting tension in current markets. Consumer sentiment is cratering, yet assets like Bitcoin and the Nasdaq have held up or even risen.
Rising inflation expectations add another layer of complexity. If the Federal Reserve interprets these expectations as a signal that inflation psychology is becoming entrenched, it may maintain a more hawkish posture on monetary policy, which could mean higher-for-longer interest rates that tend to create headwinds for non-yielding assets like Bitcoin and speculative altcoins.
The disproportionate impact on lower-income households is particularly relevant for the crypto market. These demographics overlap significantly with the retail investor base that drove previous crypto rallies.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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