Consumer sentiment increased 4.9 points month-over-month in July to 54.4, but still down 7.3 points from one year ago, according to preliminary results of the University of Michigan Surveys of Consumers. The Current Economic Conditions Index rose 7.2 points from the previous month to 54.9 but down 13.1 points from the previous year. The Consumer Expectations increased 3.3 points to 54.0, but 3.7 points lower than the July 2025 Index.
With the second straight month of 10% jumps, consumer sentiment climbed to its highest reading since February of this year on the basis of easing price pressures at the pump in recent weeks. All five index components improved, led by significant 20% increases in buying conditions for durables as well as year-ahead business conditions. This month’s rise in sentiment was pervasive across the population, seen across groups by age, income, wealth, and political party. Particularly strong increases were seen among consumers without a bachelor’s degree. However, with prices remaining frustratingly high, consumers are hardly ebullient about the economy; sentiment is down 12% from a year ago. Thus, sentiment’s upward momentum may prove difficult to sustain if recent declines in gas prices continue to reverse course. Interviews for this release spanned June 23 to July 13, with more than 70% completed before the resumption of US strikes against Iran on July 7 and the subsequent increase in gas prices.
Year-ahead inflation expectations inched down from last month to a still-elevated 4.2% this month. The current reading is still higher than the 3.4% reading seen in February before the Iran conflict began, along with all 2024 readings. Long-run inflation expectations held steady from last month at 3.3% in July, remaining a bit higher than the 2.8% to 3.2% range seen in 2024.
Read the University of Michigan Surveys of Consumers release.
