After months of uncertainty, U.S. consumer sentiment improves in May, driven by easing inflation and a stronger economic outlook.

Consumer Confidence Bounces Back in May

Consumer Confidence Shows Rebound. Good news for dealerships: U.S. consumer confidence saw a significant rebound in May. The Conference Board’s Consumer Confidence Index jumped by 12.3 points to 98.0, up from 85.7 in April. This increase marks the end of a five-month decline and suggests improving consumer sentiment heading into the summer car-buying season.

Current Conditions Show Steady Growth

The Present Situation Index—which reflects how consumers feel about current business and job market conditions—rose by 4.8 points to 135.9. This indicates growing optimism about the economic climate, which could translate into greater showroom traffic and higher closing potential for dealerships.

Expectations Surge, But Caution Remains

The Expectations Index saw an even stronger gain, rising 17.4 points to 72.8. This portion of the index measures consumer outlook on income, business conditions, and job prospects for the next six months. While the increase is notable, it still falls below the recession-warning threshold of 80, meaning dealers should remain cautiously optimistic.

Trade Policy Impacting Sentiment

Roughly half of the survey responses came after the U.S. announced a pause on some tariffs from China on May 12. This shift in trade policy may have contributed to the boost in confidence. For dealers, especially those selling imported vehicles or parts, this could mean fewer supply chain disruptions and more stable pricing.

Widespread Optimism Across Demographics

Confidence improved across all age and income groups, and political affiliations. The broad-based nature of this rebound suggests that dealerships across various markets—urban or rural, high-end or budget-focused—could benefit from increased consumer engagement.

Short-Term Outlook for Dealerships

The improvement was driven primarily by rising expectations in future income and job prospects. For dealers, this could signal a stronger Q3 ahead, as more consumers feel financially secure enough to consider major purchases like vehicles.