Tariff Concerns Dominate Inflation Sentiment, Fiscal Bill's Impact on Consumers Yet to Emerge

On May 30, data showed that the U.S. inflation expectations for the next year slightly rose to 6.6%, marking the smallest increase since the election and ending the trend of significant jumps in short-term expectations for four consecutive months.

Notably, long-term inflation expectations (the final value of the U.S. May five-to-ten-year inflation rate expectations) fell to 4.2% in May, marking the first decline since December 2024, ending an unprecedented four-month consecutive rise.

Given that consumers generally expect tariffs to be passed on to consumer prices, it is not surprising that trade policy affects their economic outlook. In contrast, although the tax and spending bill being advanced by Congress has occupied many headlines, it currently does not seem to have significantly impacted consumer sentiment. (Jin10)