U.S. Consumer Confidence Bounces After Tariff-Driven Slump

U.S. consumer confidence rose in May following five consecutive months of decline because people became less worried about Trump's tariff threats and felt better about future economic conditions.

The Conference Board’s consumer confidence index reached 98 in May after reaching its pandemic-low 85.7 in April. The positive change indicates that people have begun to regain their confidence after enduring multiple months of economic uncertainty because of trade disputes and rising inflation concerns.

Short-term economic expectations for business conditions and employment and income levels rose 17.4 points to 72.8. The reading stays below 80 points which marks the threshold for economic expansion yet demonstrates a significant shift from the negative mood earlier this year.

The positive change in public mood emerged from multiple tariff reduction announcements made by President Trump's administration. Trump suspended his planned 145% tariff on Chinese imports in May when he also established a trade agreement with the U.K. During Memorial Day weekend he postponed his planned 50% tariff on European Union imports until July 9 to facilitate ongoing trade negotiations.

According to Stephanie Guichard at the Conference Board the recovery started before the May 12 U.S.-China deal but gained momentum afterward.

The latest survey data shows consumers became less concerned about an upcoming U.S. recession when the data collection ended on May 19 but before Trump announced his EU tariff delay. The index continues to show lower levels than pre-pandemic times although experts warn that ongoing trade policy uncertainties could undo recent positive trends.

The confidence recovery touched all population segments through income levels and age groups indicating that both tariff relief and stable inflation expectations are directly influencing consumer attitudes.

Consumer spending needs continued progress in negotiations between the U.S. and other countries because Trump's unpredictable trade actions have kept global markets in a state of tension while consumer spending drives more than two-thirds of the U.S. economy.