Stocks closed at record highs Friday. Consumers told the University of Michigan they've never felt worse.
The May reading on the Survey of Consumers came in at 48.2, breaking April's previous record low and missing the Dow Jones estimate of 49.7. The current conditions index tumbled 9% on the month.
AAA put the national average for regular gas at $4.54 on Friday, with drivers paying nearly $1.40 more per gallon than they were a year ago.
Prices have also jumped almost 40 cents in just the last month, the kind of move that gets noticed at every gas station.
About one in three people named gas as their main worry, while another one in three pointed to tariffs - the slate of import taxes the White House rolled out in April 2025.
Both gas and tariffs trace back to the same place. Trump went to war with Iran in late February, and his tariffs landed in early 2025.
Survey head Joanne Hsu said sentiment isn't likely to recover until "supply disruptions have been fully resolved and energy prices fall." In plain English: until the Iran war cools and gas comes down, this number probably stays ugly.
Not everything in the report was bad. The expectations index ticked up 0.8% to 48.5, a hair higher than a year ago.
The one-year inflation outlook eased to 4.5%, and the five-year edged down to 3.4% - both still high but moving the right way.
The job market also held up. The April jobs report came out the same morning, showing payrolls grew by 115,000 and unemployment held at 4.3%.
That's an odd mix - strong jobs, soft mood. Workers are still finding paychecks, but they don't feel safe spending them.
Markets stayed up after the sentiment report, and that gap is becoming a theme. Jobs reports beat. Sentiment misses. Stocks keep climbing.
For investors, the question is whether the consumer side of the economy can stay weak while company profits stay strong, and so far the answer has been yes.
The bottom line: Sentiment polls track how Americans feel, while spending data tracks what they actually do. The two have been telling different stories all year, which is part of why stocks have shrugged off the gloom even as the mood sours.
The next CPI report and any sign of peace in the Persian Gulf will matter more for sentiment than another strong jobs print. Right now, the pump is the story.
For investors, the bigger risk is that the consumer mood does start to show up in spending. Holiday-season retail data in late summer will be the first real test. Until then, sentiment can stay ugly without bending the broader market - but the gap between mood and money won't last forever, and the longer it lingers, the more likely a sharper move shows up later in the year.
