Consumer Sentiment Hits Record Low—Economy Stays Solid

LeadershipLeadership StrategiesConsumer Sentiment Hits Record Low—Economy Stays SolidByBill Conerly,Senior Contributor.Forbes contributors publish independent expert analyses and insights. Bill Conerly connect the dots between the economy ... and business!Follow AuthorMay 28, 2026, 12:45pm EDT--:-- / --:--This voice experience is generated by AI. Learn more.This voice experience is generated by AI. Learn more.Pumping gas at gas pump. gettyConsumer sentiment has dropped to record lows, but the economic outlook isn’t too much worse. The measures of consumer attitudes that are frequently cited in news reports have little independent impact on actual behavior. They may, however, draw attention to an important concern.The Index of Consumer Sentiment, has been published by the University of Michigan since 1952, but has never been as low as the May 2026 level. Both of the major subcomponents, current conditions and expected conditions, fell. However, the other major survey, the Conference Board’s Consumer Confidence measure, was low but not unusually low.Investopedia describes differences between the two surveys: “Many who watch both numbers say that the Conference Board survey tends to be better at picking up on indicators related to the job market and job security, while the Michigan survey is a better measure of pocketbook issues like the price of gasoline.” In May 2026, employment was fine but gasoline prices soared, causing the sharp drop in Consumer Sentiment but no loss in the Consumer Confidence survey.Drivers Of Consumer SpendingThe most important driver of consumer spending is current income. For working-age people, employment is the major income source, so jobs are very important. Expectations of future income are also important. An example is the effect of cash distributions in the Covid-19 pandemic. Those payments were understood to not be ongoing income, so only a very small fraction of the amounts were spent right away. Many years earlier Milton Friedman wro...