Consumer sentiment plummets to record low as Iran war jacks up inflation
CNN • • business
Key Points:
- Consumer sentiment in the US fell to a record low of 47.6 in early May, driven by frustration over price spikes linked to the US-Israeli conflict with Iran, marking the lowest level since World War II.
- The University of Michigan survey highlighted that all demographic groups experienced declines in sentiment, with many consumers attributing economic challenges directly to the Iran conflict.
- Inflation expectations for the coming year rose sharply to 4.8%, the highest increase in a year, coinciding with new tariffs and ongoing geopolitical tensions, while the Consumer Price Index surged 0.9% in March, the largest monthly rise since 2022.
- Despite low consumer sentiment, recent spending remained solid, and the labor market shows resilience with low unemployment at 4.3%, though economists warn that rising unemployment could trigger reduced spending and slower economic growth.
- Experts caution that the unresolved Iran conflict and its economic repercussions, including higher energy prices and supply disruptions, are likely to continue weighing on the US economy and consumer confidence in the near term.
