American consumer sentiment saw a significant rebound in June, reaching its highest point since the end of last year. This uptick in optimism is attributed, in part, to a perceived easing of pressures from tariffs, despite ongoing economic uncertainties and persistent, though calming, inflation.
Consumer Sentiment Sees Notable Improvement
The University of Michigan's Survey of Consumers reported that U.S. consumer sentiment climbed 15.9% from May's reading of 52.2 to 60.5 in June. While this figure is still 20% lower than the December 2024 reading, which benefited from a post-election boost, it signals a broad-based increase in optimism compared to earlier months this year.
This positive trend was consistent across various demographic groups, including age, income, wealth, political affiliation and geographic region.
Lingering Economic Concerns
Despite the positive monthly gains, consumers continue to acknowledge considerable downside risks to the economy. Views on business conditions, personal finances, the purchase of big-ticket items, labor markets and stock markets all remain weaker than they were in December 2024.
Inflationary Trends Support Sentiment
The improvement in consumer sentiment aligns with recent Consumer Price Index (CPI) data, which indicates a gradual flattening of inflationary pressures. In May, the CPI for all urban consumers (CPI-U) rose by a modest 0.1% on a seasonally adjusted basis, down from 0.2% in April.
Mixed Year-Over-Year Performance
While month-over-month metrics for consumer sentiment, opinions on current economic conditions, and future expectations all showed improvement, they still registered year-over-year declines. This suggests that while the short-term outlook has brightened, the longer-term economic picture still holds some apprehension for consumers.
