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U.S. consumer confidence in May saw its first drop after three months of gains as Americans grapple with rising prices and inflation, both driven up by the U.S.-Israeli conflict in Iran, the monthly consumer confidence index report said Tuesday.
Confidence dipped 0.7 points to 93.1 in May, a low not seen since 2025, according to the index, which is calculated by The Conference Board, a New York-based think tank.
Consumer confidence was typically high before the pandemic, at around 130, but has remained low since the COVID-19 pandemic in 2020.
The Conference Board found that 66.5 percent of consumers cited cutting back on spending because of rising prices, 49.5 percent delayed expensive purchases and 46.6 percent delayed buying items they wanted rather than needed.
Groceries were the top items that most customers, at 60.8 percent, said they will buy at the same amount in the next six months, along with gasoline and other fuels at 53.6 percent. Only 19 percent of consumers said they expect business conditions to improve, which is down from 19.4 percent in April.
“Consumer confidence edged downward in May as the inflationary impacts of the war in the Middle East intensified,” The Conference Board’s chief economist, Dana Peterson, said in the report.
The closure of the Strait of Hormuz has effectively cut off the passage of several exported goods, including fertilizer and most notably gasoline. This has led the prices of these goods to leap globally, while in the U.S. the national average for gas is $4.49, according to AAA’s data.
Gas prices have dropped slightly as the U.S. and Iran hold negotiations in Qatar to end their conflict, though “defensive strikes” fired by U.S. forces at Iranian boats Monday was considered a ceasefire violation by Iran’s Foreign Ministry.
Peterson added that income expectations “eased” this month, “as those anticipating less income rose.” Confidence grew in households with $100,000 incomes or more as those with most other incomes fell.
“Consumer appraisals of current business conditions and the current labor market were moderately less positive compared to last month,” Peterson said. “This was somewhat offset by modest improvements in consumers’ expectations for business conditions and the labor market six months from now.”
Consumer confidence went up among consumers between ages 35 and 54 while it lowered for older and younger consumers. Consumers among the oldest group, the Silent Generation, saw an improved confidence, but confidence among other generations saw little change or was lower.
Republican consumers also saw the most confidence at just under 130, while Democrats and independents held a far lower consumer confidence at just under 80.