Consumer Confidence Slips As Middle East War Lifts Prices, Home Prices Sink In More Than Half Of Major Cities

Two closely watched reports released Tuesday painted a weaker picture of the American consumer as higher energy prices tied to the Middle East conflict continue pressuring household budgets and the U.S. housing market loses momentum across much of the country.

The Conference Board reported Tuesday morning that its Consumer Confidence Index slipped to 93.1 in May, down from a revised 93.8 in April. The survey period covered May 1 through May 19 and captured growing concern over inflation tied to the ongoing war in the Middle East.

Less than an hour earlier, S&P Dow Jones Indices released new housing data showing national home-price growth slowed further in March, while more than half of major U.S. metro markets posted outright year-over-year declines.

Together, the reports point to an American consumer growing more cautious as energy costs rise, borrowing remains expensive, and household affordability pressures intensify.

Dana M. Peterson, chief economist at The Conference Board, said consumers grew more concerned during the survey period about current business conditions, employment prospects, and inflation pressures linked to the Middle East conflict.

The details inside the confidence report were mixed but generally soft.

The Present Situation Index, which measures how Americans view current economic and labor-market conditions, fell 3.2 points to 121.2. Consumers reported jobs becoming harder to find and business conditions appearing less favorable than a month earlier.

The Expectations Index, which measures how consumers view the next six months, rose slightly to 74.4 but remained well below the key 80 level historically associated with recession risk.

The index has now remained below 80 for several consecutive months.

Consumers are also becoming more selective with discretionary spending.

The Conference Board survey showed weaker plans for vacations, hotels, motels, and personal travel. Interest in major purchases also softened.

Categories tied to necessities — including utilities and healthcare — rose in importance, replacing hotels and travel among the top spending priorities households expect over the coming months.

Dining out, streaming subscriptions, and beauty-related spending held up better than travel but still weakened modestly from prior readings.

Pet-care spending was one of the few categories showing improvement.

The pressure is increasingly tied to inflation expectations.

Higher oil prices tied to instability in the Middle East continue feeding into gasoline, transportation, shipping, and food costs. For many households, rising gas prices remain one of the most immediate visible reminders of inflation.

The housing data released Tuesday reflected similar affordability strain.

According to the S&P CoreLogic Case-Shiller National Home Price Index, national home prices rose just 0.7% in March from a year earlier, slowing again from February’s already-weak 0.8% annual increase.

The 10-city composite index rose 1.4%, while the broader 20-city index increased only 0.8%.

More notably, more than half of the major metro areas tracked by the index recorded year-over-year price declines.

Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices, described the slowdown as both broadening and deepening across the housing market.

Regional performance varied sharply.

Chicago, New York, and Cleveland led the country in home-price gains, while Denver and Tampa experienced some of the steepest declines. Los Angeles and Washington, D.C. also turned negative year over year.

Mortgage rates remain a major obstacle.

With rates hovering near 6%, many potential buyers remain priced out of the market, while existing homeowners continue holding onto lower-rate mortgages secured during earlier years. That combination has slowed transactions and reduced upward price pressure.

Inflation-adjusted home values have now declined for roughly ten consecutive months.

Markets, however, were trading higher Tuesday morning despite the softer economic data.

The S&P 500 rose approximately 0.8% in morning trading, led by technology shares, while the Nasdaq Composite climbed roughly 1.3%. The Dow Jones Industrial Average traded near flat levels.

Shares of Micron Technology surged about 15% after UBS projected significant upside tied to long-term semiconductor supply agreements and continued AI-related demand growth.

Investors are also closely watching diplomatic developments surrounding the conflict involving Iran, with traders increasingly weighing the possibility of negotiations that could ease pressure on global oil markets.

The market rally follows a strong previous week on Wall Street.

The Dow Jones Industrial Average closed Friday at a record 50,579.70, while the S&P 500 completed its eighth consecutive weekly gain — its longest winning streak since 2023. The Nasdaq also ended last week at record highs.

Attention now shifts toward several major economic releases later this week.

The Bureau of Economic Analysis is scheduled to release the Personal Consumption Expenditures price index Friday, the Federal Reserve’s preferred inflation measure. Updated GDP, consumer spending, and personal income figures are also expected.

Corporate earnings from Salesforce, Dell Technologies, and Zscaler are scheduled in coming days as investors continue assessing both economic conditions and AI-related growth trends.

For consumers, however, Tuesday’s data carried a simpler message: prices remain elevated, confidence is softening, and households are becoming increasingly cautious about the months ahead.

JBizNews Desk — New York