American consumer sentiment has dropped to its lowest level ever recorded, driven by sharp increases in living expenses and worries about the ongoing economic impact of the war with Iran.
According to the University of Michigan’s Surveys of Consumers, released on May 22, 2026, the Consumer Sentiment Index fell to 44.8 in May. This is down from 48.2 earlier in the month and 49.8 in April. Economists had expected the index to stay steady, making this sharp decline even more concerning.
The main reason for the drop appears to be frustration over higher prices, especially for gasoline. The nearly three-month conflict in the Middle East has disrupted oil shipping routes, causing gas prices to jump more than 50%. The national average now sits around $4.55 per gallon. Many families are feeling the pressure on everyday essentials like food, fuel, and household goods.
“American consumers are angry about the economy,” said Heather Long, chief economist at Navy Federal Credit Union. “They don’t like high costs for so many basics of life.”
The unhappiness is especially strong among Republicans and Independents, whose confidence reached its lowest point since the 2024 election. Sentiment among lower-income Americans and those without college degrees also fell significantly. These groups are often hit hardest by rising prices. Democrats’ views remained relatively stable.
Concerns about inflation are growing. Consumers now expect prices to rise 4.8% over the next year, up slightly from April. More alarmingly, their five-year inflation outlook jumped to 3.9% from 3.5%, with the biggest increases coming from Republicans and Independents.
The cost-of-living crisis is a major challenge for President Donald Trump’s administration. Trump won re-election partly by promising to fight inflation, but new tariffs and the effects of the Iran war have made things more difficult. A recent Reuters/Ipsos poll also showed his approval rating slipping, even among some Republicans.
Despite the gloomy consumer mood, financial markets reacted differently. Stocks on Wall Street rose, with the Dow Jones Industrial Average reaching a new record high. However, economists note that most stock market gains benefit wealthier households through retirement accounts and do not directly help average consumers.
Consumer spending has held up so far due to tax refunds and savings, but experts worry this may not last. With higher prices eating into budgets, many families have little money left for non-essential purchases like vacations or entertainment.
“The cost of living continues to be a first-order concern,” said Joanne Hsu, director of the University of Michigan surveys. More than half of consumers mentioned high prices hurting their finances.
This report adds pressure on the Federal Reserve, which is expected to keep interest rates steady as it watches inflation expectations closely.
Overall, the data paints a picture of growing economic anxiety across the United States as families struggle with higher costs and uncertainty about when relief might come.
