Fri May 16 14:30:00 UTC 2025: Okay, here’s a news article summarizing and rewriting the provided text:

**U.S. Consumer Sentiment Plunges Amid Tariff Fears, Michigan Survey Shows**

**WASHINGTON, D.C. -** U.S. consumer confidence has taken a significant hit, driven by increasing anxiety that tariffs will fuel inflation, according to a University of Michigan survey released Friday. The preliminary May reading of the index of consumer sentiment fell to 50.8, a substantial drop from 52.2 in April and the second-lowest level on record since June 2022.

The survey revealed a concerning shift in inflation expectations. Consumers now anticipate a 7.3% inflation rate over the next year, up from 6.5% last month. Long-term inflation expectations also edged higher, rising to 4.6% from 4.4%.

Joanne Hsu, director of Surveys of Consumers, highlighted the dominant role of trade policy uncertainty in consumers’ economic outlook. “Tariffs were spontaneously mentioned by nearly three-quarters of consumers, up from almost 60% in April; uncertainty over trade policy continues to dominate consumers’ thinking about the economy,” she said in a statement.

Notably, the majority of the survey was completed before the U.S. and China announced a 90-day pause on most tariffs. Whether this pause will alleviate consumer concerns remains to be seen.

Inflation expectations are closely monitored by investors and the Federal Reserve. Fed Chair Jerome Powell has indicated the central bank is closely watching inflation expectations before resuming rate cuts.

Despite the tariff pause, the effective tariff rate on goods entering the U.S. remains significantly higher than pre-Trump administration levels. Economists largely agree that tariffs could lead to a short-term rise in prices, although the magnitude and long-term inflationary impact are debated.

Recent inflation data, however, has yet to show a clear “tariff bump,” with both the Consumer Price Index (CPI) and Producer Price Index (PPI) for April falling below expectations.

The final consumer sentiment index for May, scheduled for release on May 30, will be closely scrutinized for any signs of improvement following the tariff pause announcement.

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