Consumer sentiment rose 8.3 points in June to 60.5, down 7.7 points from one year ago, according to preliminary results of the University of Michigan Surveys of Consumers. The Current Economic Conditions Index increased 4.8 points from the previous month to 63.7, only 2.2 points lower than year-ago levels. The Consumer Expectations Index rose 10.5 points to 58.4, 11.2 points lower than the June 2024 Index.
Consumer sentiment improved for the first time in six months, climbing 16% from last month but remaining about 20% below December 2024, when sentiment had exhibited a post-election bump. These trends were unanimous across the distributions of age, income, wealth, political party, and geographic region. Moreover, all five index components rose, with a particularly steep increase for short and long-run expected business conditions, consistent with a perceived easing of pressures from tariffs. Consumers appear to have settled somewhat from the shock of the extremely high tariffs announced in April and the volatility seen in the weeks that followed. However, consumers still perceive wide-ranging downside risks to the economy.
Year-ahead inflation expectations plunged from 6.6% last month to 5.1% this month. Long-run inflation expectations fell for the second straight month, stepping down from 4.2% in May to 4.1% in June. Both readings are the lowest in three months. Consumers’ fears about the potential impact of tariffs on future inflation have softened somewhat in June. Still, inflation expectations remain above readings seen throughout the second half of 2024, reflecting widespread beliefs that trade policy may still contribute to an increase in inflation in the year ahead.
Read the University of Michigan Surveys of Consumers release.
