Americans didn’t feel any sense of optimism about the US economy this month, despite tensions easing somewhat in President Donald Trump’s ever-evolving trade war. Consumer sentiment held steady in May compared to the prior month at a final reading of 52.2, the University of Michigan said in its latest survey released Friday. Sentiment was slightly worse earlier this month, according to a preliminary reading, which “turned a corner in the latter half of the month following the temporary pause on some tariffs on China goods,” according to a release. May’s reading matched April’s for the fourth-lowest reading in consumer sentiment on records going back to 1952, lower than anything seen during the Great Recession. The chaotic rollout of Trump’s tariffs has unsettled Americans in recent months, but it doesn’t necessarily mean spending is bound to weaken, economists say. Still, the resilience of the US economy — including the labor market — has come into question as Wall Street, the Federal Reserve and everyday consumers continue to have a bleak outlook. “Consumers see the outlook for the economy as no worse than last month, but they remained quite worried about the future,” Joanne Hsu, the survey’s director, said in a release. The survey’s index capturing people’s expectations for business conditions, employment and income inched slightly higher this month from April, but it was still down a sharp 30.4% compared to the same month a year earlier. Consumers’ expectations for inflation were also much more modest in May compared to prior months, with year-ahead inflation expectations seeing “the smallest increase since the election” and marking “the end of a four-month streak of extremely large jumps in short-run expectations,” the university said. The economy’s health now largely hinges on what happens in Trump’s trade war. A court this week deemed it unlawful for Trump to use emergency powers to put in place most of his sweeping tariffs, though the administration on Thursday successfully appealed to put them back into place for now. On Friday, Trump claimed that China has “totally violated” its trade agreement with the United States, which sent stocks lower. The latest Michigan survey was conducted through May 26, so it doesn’t take into account the recent court rulings and Trump lashing out at China. Fed not comfortable cutting rates amid uncertainty The constant twists and turns in Trump’s trade war is making it difficult for policymakers, economists and investors to estimate with any confidence what the US economy’s future might look like, since most of it depends on what happens with tariffs. That could keep interest rates elevated. Fed officials earlier this month “agreed that uncertainty about the economic outlook had increased further,” according to minutes from their May 6-7 meeting released Wednesday. They said that persistent uncertainty, especially with Trump continuing to flip-flop on his tariff threats, means that it is “appropriate to take a cautious approach” — holding borrowing costs steady. And several trade developments have occurred since Fed officials last convened earlier this month. “If on the backend of this thing either we don’t put the tariffs in or they reach some deals that allow us to avoid doing that, we could go back to what we were prior to April 2,” Chicago Fed President Austan Goolsbee said Thursday at a policy conference hosted by the Detroit Regional Chamber. “If you have stable full employment and inflation going to target, rates can come down to where they would eventually settle.” For now, all eyes are on whether Americans will continue to open their wallets — or pull back in the face of swirling uncertainty. Separate data from the Commerce Department out Friday showed that consumers slowed their spending sharply in April after going on a spending spree in the prior month to get ahead of any sticker shock due to tariffs. “It’s always an encouraging sign to have better sentiment data, but what really matters is consumer spending — and there’s still a segment of the population with capacity to spend because of asset prices,” Tom Bruce, macro investment strategist at Tanglewood Total Wealth Management, told CNN. “We still have a very strong wealth effect going on throughout the economy for those who own assets.”
Americans aren’t feeling encouraged by Trump’s trade negotiations
TruthLens AI Suggested Headline:
"Consumer Sentiment Remains Low Amid Ongoing Trade War Uncertainty"
CNN
7.8
TruthLens AI Summary
In May, consumer sentiment in the United States remained stagnant, reflecting a lack of optimism regarding the economy despite a slight easing of tensions in President Donald Trump's ongoing trade war. According to a survey conducted by the University of Michigan, consumer sentiment recorded a final reading of 52.2, identical to April's figure and marking one of the lowest sentiment levels since records began in 1952. The survey indicated that while sentiment improved slightly in the latter half of the month, following a temporary pause on some tariffs imposed on Chinese goods, consumers continued to express significant concern about their economic future. Notably, the index measuring expectations for business conditions, employment, and income showed a modest increase from April, yet it was still down by 30.4% compared to the previous year, underscoring persistent worries among Americans regarding inflation and overall economic health.
The current state of the economy is heavily influenced by developments in Trump's trade policies, which have created uncertainty for policymakers, economists, and investors alike. Recent court rulings have complicated the administration's ability to enforce tariffs, yet Trump has continued to assert that China has violated trade agreements, further unsettling the market. The Federal Reserve has expressed caution in its approach to interest rates, opting to keep borrowing costs steady amid heightened uncertainty. Despite some segments of the population experiencing a wealth effect due to rising asset prices, consumer spending showed signs of slowing in April, following a previous surge as consumers attempted to mitigate potential price increases from tariffs. Experts suggest that the true indicator of economic health will be consumer spending patterns moving forward, as Americans navigate the complexities of the current economic landscape shaped by trade negotiations and inflation expectations.
TruthLens AI Analysis
The article presents a concerning outlook on American consumer sentiment amidst ongoing trade negotiations led by President Donald Trump. Despite a slight easing of tensions due to a temporary pause on tariffs, the overall perception of the economy remains bleak. The consistent low readings of consumer sentiment reflect a broader anxiety about economic stability and future prospects.
Consumer Sentiment Analysis
The report highlights that consumer sentiment remained unchanged in May, echoing levels seen during the Great Recession. This stagnation suggests a pervasive uncertainty among consumers about the economic climate, raising questions about their willingness to spend. The sentiment index's marginal increase in expectations for business conditions and employment does little to alleviate fears, as it is still significantly lower than the previous year.
Economic Implications
The health of the economy is closely tied to the outcomes of Trump’s trade war, with a recent court ruling complicating the administration’s ability to implement tariffs. This legal uncertainty adds to the existing anxiety surrounding economic policies, impacting consumer confidence and potentially leading to reduced spending.
Political Context
The article subtly insinuates a lack of confidence in Trump's ability to manage trade negotiations effectively. By presenting consumer sentiment data and expert commentary, it raises questions about the administration's overall economic strategy and its implications for everyday Americans.
Public Perception and Manipulation
The language used in the article suggests a deliberate attempt to shape public perception regarding the economy and Trump’s trade policies. By emphasizing negative sentiment and historical comparisons, the article may aim to foster skepticism about the current administration's economic management.
Market Reactions
Given the focus on consumer sentiment and trade negotiations, this article could influence market behavior. Stocks in sectors sensitive to consumer spending and trade policies, such as retail and imports, may react negatively to the reported consumer outlook.
Global Impact
While the article centers on American consumer sentiment, it also has implications for global markets and international relations, especially with China. The ongoing trade war and its repercussions resonate beyond U.S. borders, affecting global economic dynamics.
Use of AI in Writing
There is a possibility that AI tools were utilized in crafting this article, especially in data analysis and trend identification. AI could have aided in presenting the economic data in a coherent manner, although the language and tone suggest a human touch aimed at eliciting emotional responses from readers.
The effectiveness of this article lies in its ability to convey a sense of urgency regarding economic conditions while subtly critiquing the current administration's trade strategies. The information presented is factual, but the interpretation and framing may serve particular narratives, which can affect its perceived reliability.