U.S. consumer sentiment slumped to its lowest level in nearly 11 years in early May. Household spending remains underpinned by a strong labor market and massive savings. Gasoline prices resumed their upward trend this month, setting an average record high of $4.432 per gallon.

The University of Michigan's preliminary consumer sentiment index tumbled 9.4% to 59.1 early this month. Economists polled by Reuters had forecast the index dipping to 64.1. Fears that the Federal Reserve will have to aggressively tighten monetary policy have unleashed a massive equities sell-off on Wall Street.

The University of Michigan survey's gauge of current economic conditions dropped 8.4% to 63.6. That was the lowest reading since 2013. Consumers viewed buying conditions for long-lasting manufactured goods as the worst since the survey started tracking the series in 1978. The Conference Board survey places more emphasis on the labor market.

Long-term inflation expectations appear to be well anchored. Consumers are sitting on at least $2 trillion in excess savings accumulated during the pandemic. "With savings high, household debt low and the jobs market strong, that spending should continue until the economy falters," an economist says.
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