Consumers are definitely feeling more positive about the economy as of late, but remain slightly apprehensive in the long run, according to the latest data from the University of Michigan.
The preliminary results for the July Index of Consumer Sentiment came in at 61.8, up 1.8% from June’s reading of 60.7. This is both the highest level reported in five months, and the second consecutive month of increases. Short run business expectations also saw about an 8% jump.
Year-over-year, however, the index is still down by 6.9%, and down 16% from the high in December 2024. In addition, personal finance expectations fell by about 4%.
“Consumers are unlikely to regain their confidence in the economy unless they feel assured that inflation is unlikely to worsen, for example if trade policy stabilizes for the foreseeable future,” clarified Surveys of Consumers Director Joanne Hsu.
Hsu also noted that other than “policy developments, including the recent passage of the tax and spending bill,” there was not much data that interviewees felt swayed their opinions.
Also on the positive side, the index of Current Economic Conditions registered at 66.8, a 3.1% increase month-over-month, and up 6.5% year-over-year. The Index of Consumer Expectations registered at 58.6, a small 0.9% increase from June, but was still down 14.8% year-over-year.
Inflation expectations also improved in July. Year-ahead inflation expectations fell 5% last month to 4.4% this month, the second consecutive month of decreases. Long-run inflation expectations also fell for the third consecutive month, decreasing from 4% in June to 3.6% in July.
Both inflation readings are at the lowest levels reported since February 2025, but they remain above December 2024. Hsu said this indicates that “consumers still perceive substantial risk that inflation will increase in the future.”
The final data for July will be released Friday, Aug. 1.
