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Americans are becoming more cautious with their spending as inflation and elevated fuel prices continue to pressure household budgets, even while U.S. stock markets remain near record highs.

New survey data released May 26 showed consumer confidence edged lower after three consecutive monthly gains, highlighting growing concerns about rising living costs across much of the country.

According to The Conference Board, its consumer confidence index slipped to 93.1 in May from the previous month. While the decline was modest, confidence levels remain well below pre-pandemic readings, when the index regularly exceeded 130.

The weaker consumer outlook contrasts with the performance of financial markets and the continued expansion of the U.S. economy.

Economists say the divergence reflects growing differences between income groups, with wealthier households benefiting from rising asset values while many lower- and middle-income families face mounting financial pressure.

Survey results indicated confidence improved among households earning at least $100,000 annually, but declined among most lower-income groups.

“The prospect of higher prices and faster inflation continues to loom over confidence readings with many households taking a more cautious approach to purchases this year,” said Ben Ayers, senior economist at Nationwide.

The report found that approximately two-thirds of Americans have reduced spending because of higher prices.

Many respondents reported postponing major purchases and cutting back on discretionary items such as clothing, footwear, hobbies, toys, and games.

Gasoline costs remain one of the biggest concerns for consumers. The national average price of gasoline has climbed to $4.49 per gallon, significantly higher than the $2.98 average recorded before the conflict involving Iran began in late February. Prices have remained near or above $4.50 for much of May.

Inflation has also accelerated. Consumer prices increased 3.8 percent in April, marking the highest inflation rate in three years and remaining well above the Federal Reserve’s 2 percent target.

Food prices have added further strain to household budgets. Analysts cite higher shipping costs linked to disruptions associated with the Iran conflict, along with drought conditions and supply challenges that have pushed beef prices higher.

For many workers, wage growth is no longer keeping pace with inflation. Adjusted for rising prices, average hourly earnings declined in April compared with the same month a year earlier, the first such decrease in three years.

Additional economic indicators point to more cautious consumer behavior. Inflation-adjusted retail sales fell in April following a strong increase the previous month.

A separate survey conducted by the University of Michigan showed consumer sentiment dropping to a record low of 44.8 in May, with many respondents identifying rising prices as a major financial burden.

The Conference Board report also suggested Americans are becoming less optimistic about employment opportunities.

The share of respondents who described jobs as “plentiful” declined to 25.5 percent, the lowest level in three years. Meanwhile, only 18.6 percent said jobs were “hard to get,” reflecting what economists characterize as a labor market with limited hiring but relatively few layoffs.

Despite the concerns, some respondents expressed greater optimism about economic conditions over the next six months. Ayers noted that improving expectations may reflect hopes that geopolitical tensions, including the conflict involving Iran, could ease later this year.