US Consumer Sentiment Revised Higher to Five-Month High

The University of Michigan’s consumer sentiment index fell to 51 in early August 2026, down from 55.2 in July and below market expectations of 54.5, ending two consecutive months of improvement. Both major components weakened, with the current conditions index declining to 51.8 and the expectations measure falling to 50.6. The deterioration was broad-based across political and demographic groups, with particularly sharp declines among older, lower-income and less-educated consumers, who are more exposed to rising prices. Expectations for business conditions also worsened significantly, falling 11% over the next year and 17% over the longer term. Inflation concerns increased slightly, with year-ahead expectations rising to 4.3% from 4.2%, while the long-term outlook remained unchanged at 3.3%. Only 8% of consumers now expect their incomes to grow faster than inflation, down from 18% in December 2024.

The University of Michigan's Consumer Sentiment Index was revised higher to 55.2 in July 2026 from a preliminary reading of 54.0, reaching its highest level since February, before the US-Iran conflict drove gas prices higher. Sentiment improved across all income, age, education, wealth, and political groups. Consumers' five-year outlook for business conditions climbed to a 12-month high, though it remained well below its historical average. Despite the improvement, overall sentiment was still 11% lower than a year earlier, reflecting continued concerns over elevated prices and the lasting effects of several years of high inflation. Year-ahead inflation expectations eased to 4.2% from 4.6% in June, while long-run expectations held steady at 3.3%. Interviews for the survey were conducted between June 23 and July 27.

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.