US Consumer Sentiment Improves for Second Straight Month

The University of Michigan's Consumer Sentiment Index rose to 54.4 in July 2026, beating expectations of 51.0 and marking a second straight monthly increase after May's record low, according to the preliminary estimate. Sentiment reached its highest level since February, supported by easing gasoline prices. All five index components improved, led by roughly 20% gains in buying conditions for durable goods and year-ahead business conditions. The improvement was broad-based across age, income, wealth, and political groups, with particularly strong gains among consumers without a bachelor's degree. Despite the rebound, sentiment remains 12% below its level a year ago as elevated prices continue to weigh on households. Meanwhile, one-year inflation expectations eased to 4.2% from 4.6%, while long-run expectations held steady at 3.3%. Most survey responses were collected before the July 7 resumption of US strikes against Iran and the subsequent rise in gasoline prices.

The University of Michigan Consumer Sentiment index was revised higher to 49.5 in June 2026, up from a preliminary reading of 48.9, although it remained slightly below forecasts of 50. Still, sentiment improved from 44.8 in May, the lowest level on record, supported in part by a moderation in gasoline prices. The expectations gauge was at 50.7, the highest in three months, compared to 49.3 in the initial estimate, as consumers’ worries over long-term consequences of the Iran conflict appear to be easing. Meanwhile, the current conditions gauge was revised lower to 47.7 from a preliminary of 48.4 and compared to 45.8 in May. The cost of living remains at the forefront of consumers’ minds. Year-ahead inflation expectations inched down to a still-elevated 4.6% from 4.8% in May, remining well above 3.4% seen in February before the Iran conflict began. Long-run inflation expectations fell more than expected to 3.3% from 3.4% in the preliminary estimate and 3.9% in May.

The University of Michigan’s Consumer Sentiment Index rose to 48.9 in early June 2026, up from May’s all-time low of 44.8 and above market expectations of 46. The modest recovery reflected some relief from early-month easing in gasoline prices, with improvements seen across age, education, and political groups. Lower-income consumers, for whom gasoline represents a larger share of budgets, showed a particularly strong increase in sentiment. Assessments of personal finances and business conditions both improved this month. However, despite June’s early gains, overall economic sentiment remains relatively low, 13% below January 2026 and 19% below a year ago, as consumers continue to focus on everyday financial pressures. Inflation concerns remain a key issue. Year-ahead inflation expectations edged down to 4.6% from 4.8% in May, while long-run inflation expectations fell to 3.4% from 3.9%. Consumers still worry that inflation could remain stubbornly high, particularly in the short term.