Consumer Sentiment Hits Record Low as Gas Prices Spike on Iran War

CNBC reported Friday that U.S. consumer sentiment has sunk to the lowest level ever recorded. Skyrocketing gas prices, fueled by the ongoing Iran war, pushed the closely watched University of Michigan index to a preliminary reading of 48.2 for early May. That figure fell short of the 49.7 economists had anticipated.

Sentiment Reaches a Consumer Sentiment Record Low

The May reading marked a 3.2% decline from April’s own record-breaking drop. It also sits nearly 8% below where confidence stood one year ago. Survey director Joanne Hsu pointed to mounting anxiety around the cost of everyday life and major purchases as the dominant force behind the slide. One-third of respondents identified fuel costs as their primary worry. Another third pointed to tariffs as a separate but equally pressing concern.

“Consumers continue to feel buffeted by cost pressures, led by soaring prices at the pump,” Hsu said, according to CNBC. She added that sentiment is unlikely to recover meaningfully until Middle East supply disruptions clear and energy prices retreat.

Background: A Year of Escalating Pressure

The deterioration in consumer attitudes did not arrive suddenly. The Trump administration unveiled a sweeping tariff package in April 2025, rattling household budgets and business planning alike. Then, in late February 2026, the U.S. launched military strikes against Iran, a move that tightened global oil supply almost immediately. The combined effect has been a steady erosion of consumer confidence through early 2026.

The current conditions index within the survey fell 9% month-over-month, reflecting real-time strain rather than future anxiety alone.

Pump Prices and Payrolls Paint a Mixed Picture

The national average for a gallon of regular gasoline climbed to $4.54 on Friday. That represents a roughly 40-cent jump in a single month and a nearly $1.40 increase compared with the same period last year. The energy burden is now one of the most acute financial pressures facing American households.

Not every data point was bleak. The expectations sub-index edged up 0.8% from April. Inflation forecasts also softened slightly, with the one-year outlook at 4.5% and the five-year projection at 3.4%, each down modestly from prior readings.

The labor market offered a separate, if partial, offset. The Bureau of Labor Statistics reported April nonfarm payrolls grew by 115,000, exceeding forecasts, with unemployment holding at 4.3%. Equity markets remained in positive territory following both releases, suggesting investors are weighing the jobs data against the softer sentiment print.

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