Consumers Lift Long-Run Inflation View to 3.9% as Iran War Keeps Energy Prices High
Updated
Updated · Fortune · May 23
Consumers Lift Long-Run Inflation View to 3.9% as Iran War Keeps Energy Prices High
3 articles · Updated · Fortune · May 23
3.9% long-run inflation expectations in May marked a sharp jump from 3.5% in April in the University of Michigan survey, while one-year expectations edged up to 4.8% from 4.7%.
The rise came as the Iran war and the closure of the Strait of Hormuz kept oil prices elevated, pushing consumers to fear inflation will spread beyond fuel and persist over time.
Consumer sentiment fell for a third straight month to a record low, below even 1970s oil-crisis levels, and the shift in long-run expectations was driven by independents and Republicans.
Chris Waller, speaking hours before the survey, warned repeated price shocks can unanchor expectations and said he would back a rate hike if that happens, though for now he favors waiting.
Are rising inflation fears creating a self-fulfilling prophecy for another painful economic crisis?
If the economy is strong but people feel poor, can monetary policy solve a crisis of confidence?
With a global energy crisis fueling inflation, is a rapid clean energy transition our only way out?
Record-Low Consumer Sentiment and High Inflation Define U.S. Economic Climate in May 2026
Overview
In May 2026, consumer confidence in the U.S. dropped sharply, reaching its lowest point in decades. Americans now feel worse about the economy than during past major crises. The economic conditions index fell 9% from the previous month, continuing a trend of low sentiment that began in 2022. This deep pessimism is driven by persistently high oil prices, which have been rising since last year due to new tariffs imposed by President Donald Trump. While there was a slight improvement in consumer expectations, the overall mood remains bleak as households struggle with higher costs and uncertain economic prospects.