WSJ What’s News - Consumer Sentiment in U.S. Falls for Fifth Straight Month

Episode Date: May 16, 2025

P.M. Edition for May 16. The University of Michigan’s preliminary consumer-sentiment index fell to 50.8 in May. WSJ economics reporter Chao Deng says the data surprised economists, and reflect fears of higher prices driven by sweeping tariffs. And higher education reporter Sara Randazzo says President Trump’s funding cuts have delivered a broad hit to universities from the Ivy League to state schools. Plus, Boeing will avoid prosecution over violating an earlier criminal settlement under a tentative deal with the Justice Department. Pierre Bienaimé hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Consumer sentiment in the U.S. falls for a fifth straight month as inflation worries rise. Plus, universities are feeling the financial strain from President Trump's funding cuts. The totality of these cuts is going to mean that there's more than just the research that has to be hit because a lot of the infrastructure for this research still exists and needs to be funded. And how a tentative deal with the Justice Department could spare Boeing from a guilty plea over 737 max charges.

It's Friday, May 16th. I'm Pierre Bienemé for the Wall Street Journal, filling in for Alex Osola. This is the PM edition of What's News, the top headlines and business stories that moved the world today. Consumer sentiment in the U.S. has fallen to the second lowest number on record. The University of Michigan said its preliminary index of consumer sentiment for May fell to 50.8, a roughly 3% drop from April. American households felt worse about the economy, with sweeping tariffs raising the prospect of higher prices.

Tariffs were spontaneously mentioned by nearly three-quarters of consumers, up from almost 60% in April. Respondents said they expect prices to surge 7.3% over the next year, compared with expectations in April for a 6.5% increase. The survey also noted that longer- run inflation expectations rose too, reflecting an especially big monthly jump among Republicans. Wall Street Journal economics reporter Chow Deng. It appears that American households are worried about inflation caused by tariffs. And this was actually a surprise to economists because the survey was taken during a period when

the White House rolled back several tariffs, including the extremely high ones on China. The closing of the survey came two days after the China tariffs were decreased. So it could have been that respondents didn't really get a chance to reflect that change. And so while it's a disappointing report, many economists are holding out to see what the final reading for sentiment in May will look like. Respondents will continue to weigh some of the back and forth tariff announcements. And then also we had at Walmart announcing just this week that it's going to raise prices on its products this month and in early summer.

That's another factor that consumers are going to be thinking about and that could push down sentiment in the final read for me. Major U.S. indexes rose today, led by the Dow, which added 332 points, or 0.8%. The S&P rose 0.7%, and the NASDAQ Composite advanced 0.5%. And for the week, the S&P 500 finished up 5.3%, the NASDAQ Composite rose 7.2%, while the Dow gained 3.4%. Charter Communications has reached a deal to buy Cox Communications for $21.9 billion. The combined company will change its name to Cox Communications. The merger will bring together two of the biggest broadband and cable operators in the

U.S. at a time when cable giants are being squeezed from all sides, given tough competition from wireless carriers, frozen government subsidies for a Biden-era broadband construction program, and the decline of cable TV. And Boeing won't be prosecuted over violating an earlier criminal settlement. A tentative deal with President Trump's Justice Department would allow the aerospace company to avoid being labeled a felon. According to people familiar with the matter, Boeing would receive a non-prosecution agreement instead of having to plead guilty, which it had agreed to do toward the end of the Biden administration.

The case stems from Boeing's admission that former employees deceived air safety regulators before two deadly crashes of 737 MAX jets in 2018 and 2019 killed 346 people. The lawyers for the families are expected to formally object to a non-prosecution agreement. The Justice Department didn't immediately respond to a request for comment. House Republican spending hawks blocked the party's giant tax and spending bill today, delivering President Trump a setback over disagreements on Medicaid, clean energy tax breaks, and budget deficits. The holdouts stopped the Budget Committee from advancing the legislation. The delay throws at least a temporary wrench in House GOP leaders' hopes to keep dissent

in the party at bay, ahead of a self-imposed deadline of May 26th or Memorial Day. Meanwhile, Binance's billionaire founder, Cheng Peng Zhao, widely known as CZ, is pushing for a pardon from President Trump. We exclusively report that three top Democratic senators are asking the administration to detail its interactions with the crypto exchange's founder. Zhao served four months in prison last year after pleading guilty to violating anti-money laundering requirements. Wall Street Journal reporter Amrith Ramkumar told our Tech News Briefing podcast that the

letter is the latest inquiry into potential conflicts of interest in the crypto industry, given the first family's financial ties to Binance. The letter lays out concerns that Democratic lawmakers and many watchdog groups have about Binance's relationship with the Trump administration overall. So CZ is seeking a presidential pardon at the same time that the Trump family discusses investing in the US arm of the company he founded, Binance. And so the senators were really asking Trump administration officials what the discussions have been like with CZ and his lawyers and the timing of those conversations and how they relate to other things going on.

So the specific letter was used to focus on the push for a pardon, but there are these larger finance concerns swirling in the background. The White House has said there are no conflicts of interest. For more from Omrath, listen to today's episode of Tech News Briefing. Coming up, the Trump administration's funding cuts to universities are already starting to bite. That's after the break. Talking about guns with others might not always feel comfortable, but it could save a life.

Here's a way to start a conversation. Your family is going over to your neighbor's home for dinner for the first time. How would you ask if there are any unlocked guns in the home? Hey! Hey, we're so excited for tonight. Before we come over though, may I ask if there are any unlocked guns in your home? Our guns are stored securely, locked in a safe that the kids can't access. Awesome. Learn how to have the conversation at AgreeToAgree.org, brought to you by the Ad Council. President Trump's funding cuts are hitting home for universities from the Ivy League to state schools. Trump has pulled or threatened to pull billions of federal research dollars, he signed an

executive order cracking down on foreign funding, and his fellow Republicans in Congress are considering higher taxes on endowment funds. Here to tell us about the effects of all that is Sarah Rendazzo, who covers higher education for the Journal. Sarah, what kind of hit have universities taken from this so far? When these funding cuts first started to come around back in March, a lot of schools did really basic things like saying hiring freezes or just look at your spending, be a little more careful, surface level things. As the months have gone on, for schools particularly

like Columbia and Harvard that have had really large sums of money pulled, they're now having to do, you know, some pretty substantial cutbacks. And so in Harvard School of Public Health, for instance, which is almost half funded with federal research dollars. They've had to do layoffs. They're doing austerity measures that include no coffee in the lounge anymore, no more ordering food for lunch, cutting back printers and physical desktop phones, even little things like that. And then we have other places that are doing some layoffs or pausing research or saying

that cuts could be coming. So it's a real gradient depending on how much each university relies on that money. And you write that the financial hit goes beyond what President Trump has pulled specifically. How is that? That's what a lot of schools are analyzing right now, but the totality of these cuts is going to mean that there's more than just the research that has to be hit because a lot of the infrastructure for this research still exists and needs to be funded. Buildings, some staffing, just things that they won't be able to cut related to the research, and so that means that they'll have to look elsewhere to make all the numbers work.

What have you been hearing from some of the people in charge? The Dean of Harvard's Faculty of Arts and Sciences, her name is Hopi Hoekstra. She had a meeting with faculty earlier this month, and she said, quote, these federal actions have set in motion changes that will not be undone, at least not in the foreseeable future. And so Harvard is suing the Trump administration trying to restore some of the federal funding cuts,

but the dean acknowledged that even if they win that lawsuit, she thinks these cuts are still going to be impactful and that really we've turned a corner that we're never going to turn back from. That was Wall Street Journal reporter Sarah Rendazzo. Thanks Sarah. Thanks so much. The private credit industry will roughly double in size over the next three years to $3 trillion. That's according to an estimate by Moody's. At the center of it are titans of private equity, Blackstone, Apollo Global Management,

and KKR, firms best known for buying and selling companies. They're now major lenders to businesses, and they compete head on with traditional banks. Miriam Gottfried covers private equity and private markets for the Wall Street Journal, and she joins me now. Miriam, how is the private equity industry going about this expansion into lending? The initial phase, the juice that caused this private credit industry to grow was tie-ups with insurance companies, managing assets on behalf of insurance companies, which need

to get a return above what they have to pay out to customers. And so they've turned to private credit to give them that extra edge. The next phase is raising money directly from individual investors, which is coming in the form of retirement accounts or people's savings or products that are designed specifically for you and me. You write that private credit operates mostly outside the reach of regulators. What are the risks here? The risks are that we don't know exactly what they're investing in at any given time.

We might be able to see, oh, they've made a loan to this company. We don't know the health of the underlying company. So there's a credit risk that we are potentially taking on. There's also liquidity risk. These products tend to tie up money for longer periods of time and individual investors might need to get their money out more quickly and there may be a risk that they can't do it. What are banks doing about this growing competition? Banks are responding in a couple of ways. JP Morgan Chase is on one end of the spectrum, the largest bank.

It's really deciding to push back. It has launched a $50 billion balance sheet initiative where it's spending $50 billion of its own balance sheet to get into private credit. Other banks have announced partnerships with private credit firms so that the bank originates the loan by bringing in the customer.

The bank has the relationship with the customer, but the funding comes from the private credit firm. Wall Street Journal reporter Miriam Gottfried. Miriam, thanks so much. My pleasure. And the chief prosecutor of the International Criminal Court, Kareem Khan, has decided to take leave until the completion of an investigation into sexual assault allegations against him by a female aide.

Khan has denied any sexual misconduct. The Wall Street Journal reported last week that the aide testified to United Nations investigators that Khan had forcible sexual intercourse with her on multiple occasions. And that's what's news for this week. Tomorrow you can look out for our weekly Markets Wrap-Up, What's News in Markets. Then on Sunday, we're having a special two-part series looking at Target and how a boycott against the retailer's rollback of DEI policies may impact its business and the black entrepreneurs relying on sales from Target's shelves. That's in What's News Sunday. And we'll be back with our

regular show on Monday morning. Today's show was produced by Anthony Bansi, with supervising producer Michael Kosmides. Michael Laval wrote our theme music. Aishaa Muslim is our development producer. Scott Salloway and Chris Zinsley are our deputy editors. And Falana Patterson is The Wall Street Journal's head of news audio. I'm Pierre Bienemay. Thanks for listening.