U.S. Consumer Confidence Rebounds Sharply After Trade Truce, Reversing Five-Month Slide
The Conference Board reported a 12.3-point surge in its Consumer Confidence Index to 98.0 in May 2025, marking the largest monthly gain since 2021 and ending a five-month decline.
This rebound followed the Trump administration’s May 12 announcement pausing tariffs on $300 billion of Chinese imports, temporarily reducing rates from 145% to 30%.
Roughly half of survey responses came after the trade deal, amplifying pre-existing optimism about economic conditions. Consumer expectations drove the recovery, with the Expectations Index jumping 17.4 points to 72.8—its steepest rise since 2011.
Respondents grew less pessimistic about short-term business conditions, job availability, and income stability. The Present Situation Index edged up 4.8 points to 135.9, though assessments of current job opportunities worsened for the fifth straight month.
Despite improvements, the Expectations Index remained below the 80 threshold historically linked to recession risks. “The rebound began before the tariff pause but accelerated post-announcement,” said Conference Board senior economist Stephanie Guichard.
Republicans showed the strongest confidence gains, aligning with support for the administration’s trade policies. All age and income groups shared in the uptick, though six-month averages remained below pre-2025 levels due to earlier declines.
Underlying concerns persisted. Eighteen percent of consumers described jobs as “hard to get”—up from 17.5% in April—while 26% postponed major purchases.
Inflation expectations dipped to 6.5% from April’s 7.0%, with some noting lower gas prices. Forty-four percent anticipated stock market gains, up seven points from April, reflecting renewed investor optimism.
The recovery follows months of eroded confidence tied to trade tensions and policy shifts. While May’s data signals temporary relief, economists caution that sustained growth hinges on finalized trade agreements and labor market stability.
Consumer spending, which drives 70% of US GDP, may see a near-term boost, but the sub-80 Expectations Index underscores lingering economic fragility.
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