IIRC the 172 has a 56 gallon tank, 53 gallons usable; this sounds about right for 5% fuel leading to cutoff.
I checked a copy of the PIH for the 172S I have floating around and I think you’re right though that the readout is wrong – it should be reading only the usable fuel, I think, rather than total fuel, and so 5% should read at the red line at 0:
