Wall Street indicators remain strong while household conditions worsen. Consumers face rising inflation, higher gasoline prices, growing credit card balances, and increased risk of further Federal Reserve rate hikes. Consumer sentiment dropped 11% in May to 44.2, the lowest level in the survey’s 75-year history, and the final reading fell 8% below an already weak preliminary figure. The survey found 57% of consumers spontaneously cited high prices as hurting their finances, up from 50% the prior month. Energy price increases are described as a hidden tax that reduces household purchasing power and intensifies financial strain.
"The latest reading from the University of Michigan's Survey of Consumers delivered a stunning result. Consumer sentiment plunged 11% in May to 44.2 - the lowest reading in the survey's 75-year history. Even more striking, the final May figure came in 8% below the already weak preliminary reading released just two weeks earlier. Here's what the numbers tell us: That isn't normal economic anxiety. It signals consumers believe conditions are deteriorating rapidly."
"The survey also found that 57% of consumers spontaneously mentioned high prices hurting their finances, up from 50% the month before. In short, inflation is no longer an abstract economic statistic - it is now dominating household decision-making. Granted, consumer confidence surveys can sometimes overreact to political headlines. But when all is said and done, Americans tend to know when their wallets are under pressure."
"The turning point appears to have come after Trump launched military operations against Iran in February. Since then, oil prices have climbed sharply, gasoline prices have followed, and inflation expectations have moved higher. That matters because energy acts like a hidden tax on consumers. When gasoline rises from $3.20 per gallon to $4.55, households have less"
Read at 24/7 Wall St.
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