Stocks are booming, unemployment is low, businesses are raking in record profits, and people hate the economy more than at any other time in history.

Even As Economic Data Get Sunnier, Consumer Feelings About The Economy Sink Further Into Gloom

Diccon Hyatt

Full Bio Diccon Hyatt is an experienced financial and economics reporter. He's written hundreds of articles breaking down complex financial topics in plain language, emphasizing the impact that economic currents would have on individuals' finances and the market. He has a Bachelor's degree in English from the University of Delaware.

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Published May 08, 2026

01:27 PM EDT

A vehicle at an Irving gas station in Winthrop, Maine, US, on Tuesday, May 5, 2026.

The steep increase in prices at the pump is weighing on consumer sentiment. Graeme Sloan / Bloomberg via Getty Images

Key Takeaways

An index of consumer sentiment hit an all-time low Friday even as other indicators about the health of the economy showed it staying resilient against the impact of the Iran war.
Soaring gas prices are influencing people's feelings more than surging stock prices or low unemployment.
People surveyed for the poll said they were less likely to make major purchases, suggesting high gas prices may force spending cutbacks.

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Stocks are booming, unemployment is low, businesses are raking in record profits, and people hate the economy more than at any other time in history.

People's feelings about their own finances and the broader economy as measured by the University of Michigan's Index of Consumer Sentiment edged down in early May, reaching a low point in the history of the survey that began in 1952, the university said Friday.1 The downtick was driven by a decline in people's assessment of the current condition of the economy, which also hit a record low.

The decline highlighted the glaring contradiction between consumer's feelings about the economy and what the hard data says about it.

Soaring gasoline prices, a consequence of the Iran war, seem to have a much bigger impact on public perception than soaring stock values or other indicators that the U.S. is doing well by most of the ways economists use measure the health of the economy. As of Friday, a gallon of regular unleaded averaged $4.54, well over the $2.98 prewar average back in February. Friday's survey showed this sudden increase in an everyday expense has had an outsized psychological impact.

“Americans don’t like inflation," Heather Long, chief economist at Navy Federal Credit Union, said in a commentary. "They are exhausted after years of high prices, and this latest surge in gas prices to nearly $4.60 is causing a lot of anger."

What This Means For The Economy

The decrease in consumer sentiment doesn't make a decline in consumer spending inevitable, but the gloomy feelings could affect the economy in other ways, and the widespread dissatisfaction could affect how people vote in the upcoming midterm elections.

The drop in consumer sentiment cuts against major economic indicators that show the economy is staying resilient if not thriving. Major stock indexes have shrugged off the war's disruptions to hit record highs. The unemployment rate was 4.3% in April, low by historic standards. Corporate profits as a percentage of the economy hit a record high in the fourth quarter of last year, according to data from the Bureau of Economic Analysis analyzed by The New York Times.2 Retail sales surged in March to a record high.

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The decline of the sentiment index to a record low doesn't necessarily mean households are about to tighten their belts and cut back on spending—ever since the pandemic, consumer sentiment surveys have not been reliable indicators of what people will actually do with their money.

However, some details in the survey suggested household budgets have been squeezed to the point where something is about to give. The survey asks respondents about major purchases they're planning, and that index has also tanked—an ominous sign, according to economists at Pantheon Macroeconomics, who said that sub-index has been a "particularly good guide to growth in consumers’ spending on durable goods" other than cars in recent months.

"A fleeting boost from strong tax refunds and unseasonably warm spring weather probably has obscured a looming drag from the hit to real incomes due to higher gas prices," Oliver Allen, senior U.S. economist at Pantheon, wrote in a commentary. "We expect the spending numbers to look much worse in May and June, as the lift from refunds and the weather fades, and gas prices remain elevated."

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