Consumer sentiment rose to its highest level in four years in May, with the University of Michigan’s consumer sentiment index reaching 79.3, up from 76.4 in April. Improvement was a result of better sentiment regarding current conditions. Consumer sentiment has now improved for nine consecutive months, after hitting historical lows in August due to debates concerning the debt ceiling.
The present conditions portion of the index improved to 87.3 in May, up from 82.9 the previous month. Future expectations dropped slightly in May, falling to 71.7, down from 72.3 the previous month.
Inflationary expectations continue to moderate. One-year inflation expectations dropped to 3.0%, down from 3.1% in April. Longer term inflation expectations inched up, with consumers expecting 3.0% inflation over the next 5 years.