Headline Index Holds Near April Lows as Financial Stress Drops 5.5%; Federal Policies Confidence Unchanged
Consumer sentiment held steady in May as the RealClearMarkets/TIPP Economic Optimism Index, the first monthly reading of U.S. consumer confidence, edged down to 42.6 from 42.8 in April, a marginal 0.2-point (0.5%) decline. After April’s sharp drop, May’s near-flat reading suggests the index has settled into a holding pattern rather than continuing to deteriorate.
The index has now remained below the neutral 50 mark for nine consecutive months, keeping the nation in what we classify as the pessimism zone.
May’s reading is 13.2% below the 304-month historical average of 49.1, underscoring that economic optimism remains well below its long-term norm.
Investor optimism rose marginally to 53.2 from 53.0, while non-investor confidence ticked down to 37.7 from 37.8. The confidence gap widened slightly from 15.2 to 15.5 points, with investors continuing to anchor above the neutral mark while non-investors remain firmly in pessimistic territory.
The RCM/TIPP Economic Optimism Index has a strong track record of anticipating the consumer confidence indicators later released by the University of Michigan and The Conference Board. From February 2001 to October 2023, TIPP released this index monthly in collaboration with its former sponsor and media partner, Investor's Business Daily.
RCM/TIPP surveyed 1,464 adults for the May index from April 28 to May 1. The online survey was conducted using TIPP’s panel network. The margin of error is ±2.9 percentage points.
The index is measured on a scale from 0 to 100. Readings above 50 indicate optimism, while those below 50 signal pessimism. A score of 50 is neutral.
The RCM/TIPP Economic Optimism Index has three key components. In May, the picture was mixed: one fell, one held, and one was essentially flat.
- The Six-Month Economic Outlook, which measures how consumers perceive the economy’s prospects in the next six months, declined 1.8%, from 38.5 in April to 37.8 in May — its lowest reading since June 2024.
- The Personal Financial Outlook, a measure of how Americans feel about their own finances in the next six months, held essentially flat, edging up 0.2% from 50.2 in April to 50.3 this month — barely clinging to neutral but stable.
- Confidence in Federal Economic Policies, a proprietary RCM/TIPP measure of views on the effectiveness of government economic policies, was unchanged at 39.8, the same as April’s reading.
RCM/TIPP also releases a companion measure, the Financial-Related Stress Index — the only monthly metric tracking Americans’ financial stress. The index fell 3.6 points, or 5.5%, from 65.7 in April to 62.1 in May, signaling notably reduced financial strain after April’s spike.
The higher the number, the more stress. Readings above 50 signal increased stress, while those below 50 indicate lower stress. A reading of 50 is considered neutral. For context, the last time the index posted below 50.0 was before the onset of the pandemic in February 2020, when it stood at 48.1.
The index has averaged 60.5 since December 2007. May’s reading of 62.1 exceeds the long-term average by 2.6%, signaling that while financial stress has eased meaningfully from April, it remains elevated above its historical norm.
“While the data indicate we're presently in 'the pessimism zone,' there's arguably room for optimism in the pessimism. To see why, just imagine what most would have predicted about the economy and confidence more broadly if they'd been told ahead of time that 2026 would include war, a falling dollar, unresolved wars, and political uncertainty related to all of the latter,” said John Tamny, the editor of RealClearMarkets.
“May’s reading suggests Americans are catching their breath after April’s sharp downturn,” said Raghavan Mayur, president of TechnoMetrica. “Financial stress eased meaningfully, with 20 of the 21 demographic groups we track reporting lower stress — a clear sign that the immediate anxiety from last month has subsided. But two warning signs remain. The Six-Month Economic Outlook fell again to 37.8, indicating that Americans’ forward-looking concerns have not lifted. And confidence in federal economic policies stayed flat at 39.8, suggesting that recent developments have not yet translated into renewed faith in the policy direction. The economy is in a holding pattern, but it’s a fragile one.”
Economic Optimism Index Breakdown
This month, three of the 21 demographic groups tracked by RCM/TIPP, including age, gender, race, and education, are in positive territory, with scores above 50 on the Economic Optimism Index. For comparison, there were three in April, six in March, and eight in February. Nine groups improved on the index, compared to one in April, seven in March, and 18 in February.
For the Six-Month Economic Outlook component, one of the 21 groups tracked by RCM/TIPP scored in optimistic territory, compared to two in April, four in March, and three in February. Economic Outlook sentiment improved for eight groups, compared to two in April, six in March, and 11 in February.
For the Personal Financial component, ten of the 21 groups tracked by RCM/TIPP were optimistic, compared to eight in April, 13 in March, and 19 in February. Thirteen groups rose compared to three in April, six in March, and 18 in February.
For the Federal Policies component, two of the 21 groups exceeded 50.0, the same as April, compared with five in March and five in February. Twelve groups rose compared to zero in April, eight in March, and 17 in February.
About TechnoMetrica/TIPP
TIPP is the polling unit of TechnoMetrica, a nationally renowned survey research and market research firm dedicated to providing clients with expert data-driven analysis to facilitate informed decision-making in their businesses. The TIPP Poll is considered the gold standard survey, having the unique distinction of being the most accurate presidential poll in the past six election cycles. The tippinsights unit provides editorials and commentaries on national and international issues, often appearing on the RealClearPolitics website.
About RealClearMarkets
RealClearMarkets (RCM) is a one-stop shop for market-related news, analysis, and commentary. RealClearMarkets collects and publishes business, finance, and economic content from across the ideological spectrum. Site features include Market Data, Off the Street Blogs, Quotes, Research Reports, Videos, Topics, and Facts & Fallacies.
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