The University of Michigan’s Consumer Sentiment Index shows optimism climbing in mid-2025, fueled by easing inflation and tariff relief. Though sentiment remains below year-ago levels, the improvement suggests consumers are regaining confidence in their financial outlook.
For retailers, the shift comes at a pivotal moment. Many have been managing tighter margins, higher labor costs and uncertain demand. Stronger sentiment may allow for more targeted promotions, leaner inventory strategies and renewed investment in discretionary categories.
Inflation data supports the trend, with monthly Consumer Price Index growth flattening. While risks remain, including global trade uncertainty, the rebound in sentiment offers retailers a chance to recalibrate strategies and meet customers where they are – cautiously optimistic, but still selective in their spending.
