Consumer sentiment was little changed from June, inching up about one index point to 61.8. While sentiment reached its highest value in five months, it remains a substantial 16% below December 2024 and is well below its historical average. Short-run business conditions improved by about 8%, whereas expected personal finances fell back about 4%. Consumers are unlikely to regain their confidence in the economy unless they feel assured that inflation is unlikely to worsen.
After four months of sharp increases to start 2025, long-run expectations fell in May and June. June’s median now matches the peak reading from mid-2022, but the three-month-moving average remains above mid-2022. Expectations exhibit substantial uncertainty, particularly considering ongoing developments and changes with economic policy.
Year-ahead inflation expectations fell for a second straight month, plunging from 5.0% last month to 4.4% this month. Long-run inflation expectations receded for the third consecutive month, falling back from 4.0% in June to 3.6% in July. Both readings are the lowest since February 2025 but remain above December 2024, indicating that consumers still perceive substantial risk that inflation will increase in the future.
Read the University of Michigan Surveys of Consumers release.
