First monthly rise since November signals cautious economic hope.
After months of economic uncertainty and declining public sentiment, consumer confidence in the United States has finally turned a corner. According to the latest data from the Conference Board, consumer confidence rose sharply in May, registering the first monthly increase since November and marking the largest single-month gain since March 2021.
This uptick comes as Americans respond to easing tensions in the ongoing trade war initiated by President Donald Trump. While challenges remain, the rebound signals that at least some consumers are regaining faith in the direction of the US economy.
Confidence Jumps on Easing Trade Tensions
The Conference Board’s index rose 12.3 points this month to a reading of 98 — significantly exceeding economist expectations of 88. Much of the gain was attributed to increased optimism across the three main components of the Expectations Index: business conditions, employment prospects, and anticipated income levels.
Stephanie Guichard, senior economist at the Conference Board, said, “The rebound was already visible before the May 12 US-China trade deal but gained momentum afterwards.” Indeed, improving diplomatic signals between the United States and key trade partners appear to have played a pivotal role in shifting consumer sentiment.
Trump’s recent agreement with China to roll back mutual tariffs for a 90-day period provided a major breakthrough after months of escalating trade restrictions. This, combined with softened rhetoric toward the European Union and initial steps toward a framework with the United Kingdom, helped improve perceptions of future economic stability.
Trade Progress Brings Cautious Relief
Although Trump has made progress on several trade fronts, uncertainty remains high. The president continues to pursue over a hundred additional trade agreements, many of which are still under negotiation. The temporary rollback of tariffs with China, for example, may not last if terms aren’t finalized by early July, when reciprocal tariffs are scheduled to resume.
“Consumer confidence may have soared, and Americans have reason to be happy given the rollback in tariffs, especially with China,” said Robert Frick, corporate economist at Navy Federal Credit Union. “But when prices start rising from existing tariffs in a month or two, it will be a sobering reminder that a new inflation fight has just begun.”
Despite short-term optimism, tensions persist. Beijing has criticized US restrictions on Huawei and rejected demands to stem fentanyl exports, while the European Union has only delayed planned tariff hikes following preliminary talks.
Impact on Spending and Economic Outlook
The rebound in consumer confidence comes at a crucial moment, as analysts evaluate the strength of consumer demand — which accounts for roughly two-thirds of US economic activity. In recent months, many Americans accelerated purchases of big-ticket items like cars in anticipation of future tariffs, skewing retail data and making it difficult to determine long-term trends.
A key measure of underlying demand, final sales to private domestic purchasers, showed an annualized growth of 3% in the first quarter, up from 2.9% in the previous period. The second-quarter figures, expected in July, will provide a clearer picture of whether consumer optimism is translating into sustained spending.
The Commerce Department is also set to release April’s data on household income, spending, and inflation this Friday — key indicators that will help determine whether consumers are continuing to spend or beginning to pull back in response to lingering trade risks and price volatility.
What Lies Ahead
While the sharp increase in consumer confidence offers a promising sign for the US economy, experts caution that continued progress depends heavily on the resolution of Trump’s trade negotiations. The president’s threat to reinstate tariffs if talks stall adds a layer of unpredictability to both consumer behavior and broader economic forecasts.
For now, Americans appear cautiously hopeful. With a brief reprieve from escalating trade penalties and improved diplomatic tone from Washington, consumers are showing signs of renewed engagement. But sustained recovery will likely depend on how trade policies evolve in the weeks ahead — and whether the economy can maintain its momentum amid persistent uncertainty.