U.S. May Consumer Sentiment Hits Record Low 48.2, Missing Estimates; Iran-Driven Gas Prices Cited

The University of Michigan's preliminary reading on U.S. consumer sentiment for May 2026 came in at 48.2, setting a fresh all-time record low and falling short of estimates. Surging gasoline prices driven by Iran's blockade of the Strait of Hormuz were cited as the primary driver, according to CNBC reporting by Jeff Cox published May 8.

The reading of 48.2 breaks the prior record low of 50.0 set in June 2022, when CPI inflation hit its cycle peak. Inflation expectations data indicated that consumers expect prices to rise materially further over the next 12 months. Brent crude has risen 95% in Q1 and trades above $101 per barrel, with U.S. retail gas prices having surged sharply since the Iran war began — directly eroding household disposable income.

Consumer sentiment is a leading indicator for retail spending, home purchases, and durable goods consumption. A sustained reading below 50 heightens downside risks to Q2 U.S. GDP growth. The S&P 500 extended its winning streak to six consecutive weeks as of May 9, but the gap between elevated equity valuations and deteriorating consumer fundamentals is widening.

For the Federal Reserve, the dynamic creates a policy dilemma: energy-driven inflation limits room to cut rates, while deteriorating consumer confidence raises recessionary risks. April's FOMC produced one dissenting vote for a rate hike. The dot-plot signals two potential cuts by year-end, but external supply shocks from Iran make that path contingent on a Hormuz resolution that remains elusive. The next FOMC is scheduled for June.

Watch: April CPI release (Tuesday, May 13), April retail sales (May 15), and May Conference Board Consumer Confidence. If the Michigan survey's record-low readings flow through to hard spending data, the Fed's room to maneuver narrows significantly.