US Consumer Confidence Cools Down Again in May, Two-Thirds of Households Cut Spending
Alina Collins
Both major US consumer confidence gauges weakened further in May, with two-thirds of consumers already cutting back — the spending engine is slowing, and the economy's shock-absorption is thinning.
How far has consumer confidence fallen?
The Conference Board's May consumer confidence index came in at 93.1, down from April's upwardly revised 93.8.
The University of Michigan sentiment index dropped 5.0 points to 44.8, deep in historically low territory.
In plain terms = two different yardsticks, same verdict: consumers are steadily turning colder.
Why are inflation and rate expectations rising together?
Senior Conference Board economist Yelena Shulyatyeva noted that consumers expect higher inflation and higher interest rates, and are cutting spending plans accordingly.
This means → consumers are already preparing for a future where goods cost more and borrowing costs more — and tightening their wallets now.
The survey shows planned cuts to both goods and services spending, a trend that has intensified throughout the US-Iran conflict.
What are two-thirds of consumers cutting back on?
A special Conference Board survey question added in May found two-thirds of respondents have reduced overall spending due to rising prices.
Most are choosing to buy fewer items or delay big-ticket purchases.
Put simply = they haven't stopped buying — they're buying less and buying later.
Will consumption collapse? Where is the real risk?
Shulyatyeva expects no sharp drop in consumer spending, but growth will slow noticeably.
Quarterly GDP data already shows the consumer sector narrowing, while data-center-driven business investment stands out as the relative bright spot.
This reflects a growing concentration of growth in AI and business investment — without consumer support, the economy becomes more fragile if an external shock hits.
Why are the two confidence indices diverging?
The Conference Board index leans more heavily on the labor market, which remains relatively stable — giving it more resilience.
The Michigan index captures how consumers *feel* about prices and the future, which is why it has fallen harder.
This means → employment is still holding up, but consumers' lived experience already feels cold — the gap between the two indices is itself a warning signal.
Content is for reference only, not financial advice.