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Survey of Consumers Director Joanne Hsu on tariffs and consumer uncertainty

Survey of Consumers Director Joanne Hsu on tariffs and consumer uncertainty

CNBC20-05-2025

Survey of Consumers Director Joanne Hsu talks tariffs and consumer uncertainty at the 2025 CNBC CEO Council Summit.

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Consumer Sentiment Held Steady in May As Tariff Uncertainty Persists
Consumer Sentiment Held Steady in May As Tariff Uncertainty Persists

Yahoo

time30-05-2025

  • Yahoo

Consumer Sentiment Held Steady in May As Tariff Uncertainty Persists

The Michigan Consumer Sentiment Index improved from its mid-May preliminary reading to 52.2, matching April's results. Inflation expectations moved lower as consumers factored in President Donald Trump's move to reduce tariffs on China temporarily. While consumers felt better about the short-term economic outlook, they were more worried about wages and remained pessimistic about long-term economic freefall in sentiment leveled off in May as consumers worried less about price increases from tariffs, but still felt uneasy about the economic outlook. The final Michigan Consumer Sentiment Index for May improved slightly from the preliminary results released two weeks ago to 52.2, matching the final results from April. The reading ends four straight months of declines for the closely watched consumer survey. The improved sentiment reflected President Donald Trump's move on May 12 to temporarily reduce tariffs on China to 30% from 145%. It shadows a similar improvement in the Conference Board's Consumer Confidence report, which rose by more than 12 points in May on the temporary tariff truce. Consumers also felt a little better about inflation at the end of the month, with year-ahead expectations for price increases coming in at 6.6%, lower than the preliminary reading but higher than April's inflation expectations. Long-term inflation expectations ticked lower in the report. 'In the second half of the month, sentiment lifted and inflation expectations eased in the wake of the May 12 pause on some tariffs on goods from China,' said Joanne Hsu, director of the University of Michigan Survey of Consumers. 'With continued policy uncertainty, however, consumers continue to expect an economic slowdown to come.' Uncertainty has spread since consumers were asked about their outlook. Courts have gotten involved in tariffs, and Trump has called the tariff pause on Chinese goods into question. While expected short-term business conditions improved, likely from the pause in tariffs, they were offset by declines in consumers' current personal finances that stemmed from stagnant wages, the report said. About 64% of consumers said they expect business conditions to worsen in the year ahead, the same as last month, but more than double the 29% who expressed similar concerns six months ago. 'Consumers still expect the economy to weaken and foresee weaker business conditions and income growth as they express ongoing frustration with the cost of living,' said Oren Klachkin, financial market economist for Nationwide. 'However, the survey suggests consumer attitudes may improve if trade deals are announced and tariff uncertainty diminishes.' The report continued to show the separation between 'hard' and 'soft' data as economic indicators like retail sales remained strong despite consumers raising worries about the economy. 'While the soft data continue to cast an unfavorable light, the hard data paint a comparatively better picture,' Klachkin said. 'Developments on the tariff front will likely continue to shape consumer attitudes.' Read the original article on Investopedia Sign in to access your portfolio

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