The University of Michigan's Friday announcement showed that the US preliminary consumer sentiment index for May reached 50.8 points, down from 52.2 points in April. This result is better than analysts' expectations, with the index forecast to increase to 53.4 points.
The psychological index has remained almost unchanged this month, falling slightly by only 1.4 points after 4 consecutive months of sharp decline. From January 2025 to now, consumer sentiment has decreased by nearly 30%.
Most components of the index have changed little, but the current assessment of the personal financial situation has decreased by nearly 10% due to weak income. Up to 3/4 of respondents mentioned import taxes themselves, up from nearly 60% in April, which shows that uncertainty about trade policy is still a major concern for consumers in the economy said consumer survey director Joanne Hsu.
Components of the index show that inflation concerns are rising sharply.
Inflation is forecast to skyrocket from 6.5% last month to 7.3% this month next year. Both Democratic and Republican voters expect inflation to increase. Long-term inflation forecasts also increased from 4.4% to 4.6%, especially strongly in the Republican group.
The final announcement in May will more clearly reflect whether the postponement of some import tariffs from China on May 12 will affect consumer expectations, added Joanne Hsu.
Notably, this tax delay does not seem to have significantly improved sentiment.
The interviews for the survey were conducted from April 22 to May 13, ending two days after the announcement of a temporary suspension of certain import tariffs from China. Some indicators have improved slightly after this move, but the increase is too small to change the general picture - consumers are still pessimistic about the economy.
This reaction is similar to after a portion of the tax was postponed on April 9, when the sentiment only increased slightly and then continued to decrease" - Hsu said.
In another development, the US Commerce Department said that the number of housing projects started last month increased by 1.6%, reaching 1.361 million units at an annual rate, up from the adjustment of 1.339 million units in March. This result is in line with the experts' predictions.
However, compared to the same period last year, the number of houses under construction has decreased by 1.7%. In particular, the construction of houses for a household (single-parent houses) decreased by 2.1%, showing that this segment is still quite quiet.
Although the number of houses under construction has increased, the prospects for the construction industry are still not bright due to a sharp decrease in the number of construction permits issued. Specifically, only 1.412 million licenses were granted in the month, down 4.7% from 1.481 million in March and lower than analysts' expectations (1.45 million).
Economists say the housing sector an important factor in US GDP is under great pressure because high interest rates increase home purchase loans, while scarce housing supply pushes up prices, making many people unable to buy.
If the US economy continues to stagnate, the housing market could face further difficulties as people are less and less financially capable of owning a house.
Investors are still cautious as the number of construction permits - a clue for future construction activities - has decreased sharply compared to last month, lower than market expectations. In addition, the continued decline in the construction of single-member houses reflects weak demand due to high home loan interest rates. If this trend continues, the US economic outlook could deteriorate, thereby boosting demand for gold in the medium and long term as a safe-haven asset.
