Wednesday, August 27, 2025

US Consumer Confidence Plummets Amid Renewed Inflation Fears

US consumer sentiment sharply declined at the beginning of May, as an increasing number of Americans grow worried about rapidly accelerating prices.

According to data released on Friday, the University of Michigan preliminary sentiment index dropped from 88.3 to 82.8 in May. The latest figure is significantly below some of the most pessimistic consensus estimates, suggesting that inflation fears among consumers are becoming more pronounced.

Source: University of Michigan

According to the survey, American consumers anticipate inflation levels to increase to 4.6% within the next year— the highest reading in more than a decade. Similarly, 43% of those respondents expect prices to jump by at least 5%. As a result, a higher number of Americans forecast inflation will outpace income growth, putting spending— which accounts for more than two-thirds of the US economy— into peril.

Source: University of Michigan

The survey’s respondents said they were primarily concerned about escalating prices for items such as fuel, homes, and vehicles— the things that consumers are actually buying. According to the survey’s director, Richard Curtin, the combination of persistent demand for goods and services coupled with accelerating price pressures “creates the potential for an inflationary psychology” where consumers begin demanding higher wages from employers or step up purchases before additional price gains take effect.


Information for this briefing was found via University of Michigan. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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