After five consecutive months of falling confidence that pushed consumer sentiment to its lowest point since the start of the COVID-19 pandemic, Americans’ views of the economy improved in May. Much of the previous decline had been fueled by concerns about President Donald Trump’s tariffs and their potential impact.
The Conference Board reported Tuesday that its consumer confidence index rose by 12.3 points in May, reaching 98 compared to April’s 85.7, which had been the weakest reading since May 2020.
A specific gauge tracking Americans’ short-term outlook for income, business conditions, and the job market surged 17.4 points to 72.8. Despite the jump, this figure remains below 80 — a threshold often associated with recession signals. Meanwhile, fewer consumers now expect a U.S. recession within the next year compared to the previous month.
Trump’s aggressive trade policies, including steep tariffs on imported goods, had cast a shadow over economic prospects and labor markets, fueling fears of a downturn. However, recent tariff pauses and ongoing trade negotiations appear to have eased some of these concerns temporarily.
Stephanie Guichard, senior economist at The Conference Board, noted, “The rebound was already visible before the May 12 U.S.-China trade agreement but gained momentum afterwards.”
Earlier this year, Trump had imposed tariffs as high as 145% on many Chinese goods but agreed to a 90-day pause to allow for trade talks. The U.S. also reached a deal with the United Kingdom in early May. Over the Memorial Day weekend, Trump and European Union leaders announced a delay on a planned 50% tariff on EU imports until July 9. This delay, however, came after the survey’s closing date on May 19.
The boost in confidence was widespread, spanning all age and income groups. Consumers’ views of the current economic situation improved, except for their perceptions of job availability, which weakened for the fifth consecutive month — despite solid job growth reported in April.
Interestingly, less than a quarter of those surveyed expressed worry about losing their jobs. In contrast, about half were concerned about being able to afford the things they need or want.
Recent labor data showed that employers added 177,000 jobs in April, with the unemployment rate holding steady at a low 4.2%.
Survey responses indicated that tariffs remain the top concern among consumers, along with inflation. While some respondents felt inflation pressures, including gas prices, were easing, others remained wary.
According to Commerce Department data released earlier in May, consumer prices rose 2.3% in March compared to a year earlier — a slowdown from February’s 2.7% increase. Core inflation, which excludes volatile food and energy prices, rose 2.6%, down from 3% the previous month. Economists often focus on core inflation to gauge underlying price trends.
Gas prices averaged about $3.17 per gallon in May, down from $3.59 a year earlier but slightly higher than April.
Still, many economists caution that the current inflation slowdown could be short-lived, as tariffs already in place may soon drive prices higher in various sectors. Robert Frick, an economist at Navy Federal Credit Union, warned that the tariff rollbacks might have boosted consumer confidence temporarily, but rising prices from existing tariffs could soon remind Americans that inflation remains a challenge.
The Conference Board’s survey also found that Americans’ intentions to spend on homes, vehicles, and vacations increased in May, with noticeable growth following the U.S.-China tariff pause.