University of Michigan Consumer Sentiment Falls to Record Low

American consumer sentiment has fallen to its lowest level on record, according to the latest survey from the University of Michigan. The final reading of the Consumer Sentiment Index for May dropped to 44.8, marking the third consecutive monthly decline and sinking below the previous record low set in April.

The primary driver of the decline is a renewed surge in energy prices linked to supply disruptions from the Strait of Hormuz, a critical oil shipping passage. Survey director Joanne Hsu stated that the cost of living remains a first-order concern, with 57% of consumers spontaneously citing high prices as eroding their personal finances, an increase from 50% last month. The survey indicated that consumers' assessment of their personal finances fell by 13% in May.

Lower-income consumers and those without college degrees posted some of the sharpest declines in sentiment, groups that are more sensitive to increases in the cost of gasoline and other essentials. Hsu noted that after three months of supply disruptions, consumers appear worried that the situation is unlikely to be resolved quickly.

This pessimism extends to inflation expectations. Consumers' outlook for price...