U.S. consumer confidence declined slightly this month as gas prices stayed high and inflation remained elevated, a sharp contrast to soaring stock prices that have neared record levels.
The Conference Board’s consumer confidence index slipped 0.7 points to 93.1 in May, the first decline after three months of gains.
The index follows a separate gauge of consumer sentiment released last week by the University of Michigan, which fell to a record low this month. Spikes in gas prices as well as higher food costs have worsened inflation, which has outpaced the growth in average paychecks, reducing most Americans’ purchasing power. Americans have soured on President Trump’s economic policies, polls show, potentially creating problems for Republicans heading into the midterm elections.
Gas prices have soared to a nationwide average of $4.49 a gallon from $2.98 just before the war began at the end of February, and have been at or above $4.50 a gallon for nearly all of May.
This month, the Conference Board added special questions to its survey, which found rising prices have caused most Americans to change their spending habits. Two-thirds of respondents said they are cutting back spending in response to the increases, with most of those reducing overall purchases and delaying more expensive acquisitions.
Many consumers are also planning to economize on clothes, shoes, hobby items, and toys and games, the survey found.
Inflation jumped to 3.8% in April, the highest in three years and far above the Federal Reserve’s 2% target. In addition to more expensive gas, grocery prices have also started rising more quickly, likely driven by higher shipping costs. Beef prices have also risen sharply, as drought and other factors have reduced cattle herds.
The higher prices are, on average, reducing Americans’ inflation-adjusted incomes. Average hourly earnings, adjusted for price changes, shrank in April from a year earlier for the first time in three years.
