Consumer confidence in the United States took a significant leap in May 2025, climbing 12.3 points to 98.0, according to the Conference Board’s latest report. This marks a sharp reversal from recent months, where fears over trade tariffs and economic uncertainty weighed heavily on American households. The announcement of a 90-day pause on certain U.S.-China tariffs, made on May 12, seems to have sparked this newfound optimism. But what does this mean for the economy, and can this wave of positivity last? Let’s dive into the factors fueling this boost and explore what lies ahead.
Why Consumer Confidence Matters
Consumer confidence reflects how optimistic or pessimistic people feel about their financial future and the broader economy. When confidence rises, folks tend to spend more, boosting retail, housing, and other sectors. The recent jump to 98.0, up from 85.7 in April, signals that Americans are feeling better about their jobs and wallets. Surveys suggest that about half of the responses came after the tariff pause, which likely eased fears of rising prices. Yet, tariffs remain a top concern, even if worries about business conditions and job availability have softened.
This metric isn’t just a number—it’s a pulse check on the economy. High confidence often means more spending, which drives roughly 70% of U.S. economic activity. The Dow and Nasdaq reflected this mood, rising 388 and 331 points, respectively, on the same day the report dropped. But the road to sustained optimism isn’t without bumps, as mixed economic signals keep analysts on edge.
The Trade Truce Effect on Consumer Confidence
The U.S.-China trade truce, announced mid-May, played a big role in lifting consumer confidence. By pausing tariffs on some Chinese imports, the agreement reduced fears of immediate price hikes on everyday goods like electronics and clothing. Before the truce, surveys showed consumer sentiment at its second-lowest level ever, with the University of Michigan’s index plummeting to 50.8 earlier in May. Inflation expectations had spiked as people braced for costlier imports.
The truce changed the narrative. Shoppers now feel less pressure on their budgets, at least for the next 90 days. Small businesses, too, are breathing easier, as tariff-related costs threatened their margins. The Penta-CivicScience Economic Sentiment Index also rose 2.6 points to 34.2 in the two weeks following the truce, with all five of its indicators showing gains. This suggests the tariff pause resonated across various economic measures, from personal finances to trust in government policy.
| Economic Indicator | Pre-Truce (April) | Post-Truce (May) |
|---|---|---|
| Conference Board Consumer Confidence | 85.7 | 98.0 |
| University of Michigan Sentiment | 52.2 | 50.8 (early May) |
| Penta-CivicScience ESI | 31.6 | 34.2 |
Challenges to Sustaining Consumer Confidence
Despite the uptick, consumer confidence faces headwinds. Inflation expectations remain high, as many still worry about tariffs returning after the 90-day pause. The Conference Board notes that while concerns about job availability eased, tariffs continue to loom large. Meanwhile, mixed economic data—like a 1.3% drop in April core capital goods orders—hints at businesses hesitating on investments due to trade uncertainty. Housing prices also slowed, with March S&P house prices down 0.1% month-over-month, signaling caution in a key sector.
Global sentiment offers context. The UK projects 1% growth for 2025, showing mild optimism, but Gulf markets dipped due to uneven Chinese data. These global ripples could affect U.S. confidence if trade talks falter. For now, the truce has bought time, but consumers and businesses alike are watching closely for what comes next.
Looking Ahead: Can Optimism Hold?
The surge in consumer confidence is a bright spot, but its staying power depends on policy moves and economic clarity. If the U.S. and China extend their truce or strike a longer-term deal, confidence could climb further, spurring spending and growth. However, renewed tariffs or unexpected inflation spikes could sour the mood quickly. Analysts suggest keeping an eye on retail sales and job reports in the coming months to gauge whether this optimism translates into action.
For everyday Americans, the message is clear: confidence is back, but it’s fragile. Shoppers might feel bold enough to splurge on summer vacations or big-ticket items, but they’re also keeping a wary eye on prices. Businesses, meanwhile, need to seize this moment to invest and expand before uncertainty creeps back in.
Share your thoughts in the comments—how are you feeling about the economy today?