Consumer sentiment got a strong boost in May, thanks to optimism over easing trade tensions between the United States and China. According to a survey released on May 27, 2025 by The Conference Board, the Consumer Confidence Index jumped to 98.0, marking a 12.3-point increase from April. This figure also far exceeded the Dow Jones consensus estimate of 86.0, as quoted on CNBC.
Trade Truce Sparks Optimism
The primary driver of the surge was the progress in U.S.-China trade negotiations. President Donald Trump’s decision on May 12 to halt severe tariffs appears to have reassured consumers. The May uptick follows five consecutive months of declining consumer confidence, a trend fueled by the escalating trade war initiated by President Trump. China was a key focus of U.S. tariff actions until both sides reached a temporary truce in early May.
Additional Sentiment Measures Show Gains
Other components of the survey also showed improvement. The Present Situation Index climbed to 135.9, up 4.8 points. The Expectations Index surged to 72.8, an increase of 17.4 points. Investor sentiment improved as well, with 44% now expecting stock prices to rise over the next 12 months, compared to 37.6% in April.
Labor Market Outlook Brightens
Perceptions of the labor market also improved: about 19.2% of respondents expect more job availability in the next six months (up from 13.9%). Those expecting fewer jobs fell to 26.6% (from 32.4%). A slightly increased 31.8% said jobs are “plentiful.”
ETFs to Win
Against this backdrop, both consumer discretionary and staples-based exchange-traded funds (ETFs) should benefit. These ETFs include Consumer Discretionary Select Sector SPDR Fund XLY, Vanguard Consumer Discretionary ETF VCR, Fidelity MSCI Consumer Discretionary Index ETF FDIS, SPDR S&P Retail ETF XRT, Consumer Staples Select Sector SPDR Fund XLP, iShares U.S. Consumer Discretionary ETF IYC and iShares U.S. Consumer Staples ETF IYK.
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Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports SPDR S&P Retail ETF (XRT): ETF Research Reports Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports Vanguard Consumer Discretionary ETF (VCR): ETF Research Reports iShares U.S. Consumer Staples ETF (IYK): ETF Research Reports Fidelity MSCI Consumer Discretionary Index ETF (FDIS): ETF Research Reports iShares U.S. Consumer Discretionary ETF (IYC): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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