Preliminary Consumer Sentiment “Surged” to 15-Year High in May

Spontaneous References to Tariffs Could Weigh on Final Consumer Sentiment Reading

The Survey of Consumers preliminary reading on consumer sentiment in May soared to 102.4, a 15-year high that crushed the consensus forecast. The forecast range was a low of 96.0 to a high of 97.8 and the consensus was 97.5, slightly higher than the final reading of 97.2 in April.

“The Index of Consumer Sentiment surged in early May to its highest level in fifteen years,” Richard Curtain, Chief Economist for Survey of Consumers, said. “All of the May gain was in the Expectations Index, which also rose to its highest level since 2004, while the Current Conditions Index was virtually unchanged and well below the cyclical peak set in March 2018.”

Mr. Curtain did note the potential negative impact of tariffs on the final reading on consumer sentiment. Most of the gains were recorded prior to the collapse of trade negotiations with China and reciprocal tariffs.

As the above chart shows, spontaneous references to tariffs peaked in July, corresponds to the initial tariff imposition. Negative references to tariffs rose over the prior week and Mr. Curtain said they are “likely to rise further in late May and June.”

Nevertheless, this marks only the fourth time during the expansion that the Survey of Consumers was above 100, all of which were measured under the Trump Administration.

The final reading on consumer sentiment for the month is scheduled to be released on Friday, May 31, 2019 at 10:00 AM EST.