U.S. consumer sentiment slumped further in May while one-year inflation expectations surged as households remained concerned about the economic impact of President Donald Trump's aggressive trade policy.
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The University of Michigan Surveys of Consumers on Friday said its Consumer Sentiment Index dropped to 50.8 this month from a final reading of 52.2 in April. Economists polled by Reuters had forecast the index rising to 53.4.
"Tariffs were spontaneously mentioned by nearly three-quarters of consumers, up from almost 60% in April; uncertainty over trade policy continues to dominate consumers’ thinking about the economy," said Surveys of Consumers Director Joanne Hsu. "Slight increases in sentiment this month for independents were offset by a 7% decline among Republicans."
Consumers' 12-month inflation expectations jumped to 7.3% from 6.5% in April. Both Democrats and Republicans anticipated higher inflation in the near term.