After months of uncertainty and anxiety, consumer confidence in the United States has staged its most dramatic recovery in years. The catalyst? A long-awaited truce in the ongoing trade war between the U.S. and China. As of May 2025, the Conference Board’s Consumer Confidence Index soared to 98.0, leaping by 12.3 points from April and marking the biggest monthly gain in four years. This turnaround, fueled by optimism over easing trade tensions, has exceeded even the most optimistic forecasts and set the tone for renewed economic vigor.
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The Latest Surge in Consumer Confidence
The rebound in consumer confidence comes after a challenging period. For five consecutive months, Americans grew increasingly pessimistic about the economy, largely due to escalating tariffs and fears of rising prices. The trade war, characterized by tit-for-tat tariffs and unpredictable policy shifts, weighed heavily on household sentiment and spending decisions.
But in early May, a breakthrough arrived. The White House announced a 90-day suspension of the most severe tariffs on Chinese goods, reducing rates from a punishing 145% to a far more manageable 30%. This agreement, reached after intense negotiations, immediately shifted the economic outlook and gave consumers a reason to believe that relief was on the horizon.
Key highlights from the May 2025 Consumer Confidence Report:
- The Consumer Confidence Index jumped to 98.0, up from a revised 85.7 in April.
- The Present Situation Index rose to 135.9, indicating improved views on current business and labor market conditions.
- The Expectations Index surged by 17.4 points to 72.8, reflecting growing optimism about the next six months.
- Investor sentiment also improved, with 44% expecting higher stock prices over the coming year.
How the U.S.-China Trade Truce Boosted Consumer Sentiment
The direct link between the trade truce and the surge in consumer confidence is clear. As tariffs eased, the immediate threat of higher prices on everyday goods diminished. Consumers, who had been bracing for further economic pain, responded swiftly to the positive news.
Stephanie Guichard, a senior economist at the Conference Board, noted that “the rebound was already visible before the May 12 U.S.-China trade deal but gained momentum afterwards.” The survey data supports this: about half of all responses were collected after the tariff suspension was announced, and the improvement in sentiment accelerated in the days that followed.
Why the trade truce matters for consumer confidence:
- Lower tariffs reduce the risk of price hikes on imported goods.
- Businesses gain clarity and stability, supporting job growth and investment.
- Stock markets tend to rally on positive trade news, boosting household wealth and optimism.
- Consumers feel more secure in their finances, encouraging spending on big-ticket items.
Remaining Concerns: Tariffs and Inflation Anxiety
Despite the sharp rebound, not all worries have vanished. Many households remain concerned that tariffs could still drive up prices and hurt the broader economy. While the 90-day truce offers temporary relief, questions linger about what happens next if negotiations stall or new disputes arise.
Recent surveys show that tariffs remain top-of-mind for consumers. Three-quarters of respondents mentioned tariffs as a key concern, a notable increase from previous months. Even as the immediate threat has receded, the possibility of renewed trade tensions continues to shape expectations about inflation and economic growth.
Key consumer concerns going forward:
- Will the truce be extended or made permanent?
- Could tariffs return, triggering another round of price increases?
- How will ongoing trade negotiations affect jobs and wages?
- What steps will policymakers take to ensure long-term stability?
The Broader Impact: Labor Market and Investment Optimism
The improvement in consumer confidence has already begun to ripple through other areas of the economy. Views on the labor market have brightened, with nearly one in five Americans now expecting more jobs to be available in the next six months. This is a significant jump from April, when only 13.9% held that view.
Investor sentiment has also turned more positive. With the stock market responding favorably to the trade truce, more Americans are optimistic about their financial prospects. This renewed confidence could translate into increased spending and investment, providing further momentum for the recovery.
Recent trends following the confidence surge:
- Higher expectations for job creation and wage growth.
- Increased willingness to make major purchases, such as homes and cars.
- Improved outlook for small businesses and entrepreneurs.
- Greater stability in financial markets, supporting retirement and investment accounts.
What’s Next for Consumer Confidence?
The coming months will be critical in determining whether this rebound in consumer confidence is sustained. Much depends on the outcome of ongoing trade negotiations and the ability of policymakers to maintain economic stability. For now, the mood has shifted decisively toward optimism, providing a much-needed boost for households and businesses alike.
Summary Table: May 2025 Consumer Confidence Highlights
| Indicator | April 2025 | May 2025 | Change |
|---|---|---|---|
| Consumer Confidence Index | 85.7 | 98.0 | +12.3 points |
| Present Situation Index | 131.1 | 135.9 | +4.8 points |
| Expectations Index | 55.4 | 72.8 | +17.4 points |
| Stock Market Optimism | 37.6% | 44.0% | +6.4 points |
| Job Growth Expectations | 13.9% | 19.2% | +5.3 points |
Conclusion: A New Chapter for Consumer Confidence
The sharp rise in consumer confidence following the U.S.-China trade truce marks a turning point after months of economic anxiety. While challenges remain, Americans are once again looking to the future with hope. The next steps in trade negotiations will be closely watched, but for now, the surge in optimism is a welcome sign for the economy.
Ready to make the most of this renewed optimism? Stay informed, stay engaged, and take advantage of new opportunities as consumer confidence continues to rise.