Consumers may finally be warming up to the economy again, and just in time for summer, according to the latest data from the University of Michigan.
The preliminary results for June’s Index of Consumer Sentiment came in at 60.5, a 15.9% from the 52.2 reading seen in May. This is the first increase in sentiment seen in six months. However, sentiment is still down 11.3% from the same time last year.
“These trends were unanimous across the distributions of age, income, wealth, political party and geographic region,” said Surveys of Consumers Director Joanne Hsu. “Moreover, all five index components rose, with a particularly steep increase for short and long-run expected business conditions, consistent with a perceived easing of pressures from tariffs.”
The Index of Current Economic Conditions grew 8.1% to 63.7, only down a narrow 3.3% from the same time last year. Hsu noted that consumers “appear to have settled somewhat from the shock of the extremely high tariffs announced and the policy volatility seen in the weeks that followed.”
“However, consumers still perceive wide-ranging downside risks to the economy,” she continued. “Their views of business conditions, personal finances, buying conditions for big-ticket items, labor markets and stock markets all remain well below six months ago in December 2024.”
The Index of Consumer Expectations saw a leap of 21.9% to 58.4, but was still down 16.1% from the same time last year.
Year-ahead inflation expectations fell from 6.6% last month to 5.1% this month, and long-run inflation expectations fell for the second straight month from 4.2% in May to 4.1% in June. Both readings were the lowest seen in three months.
Actual inflation data so far has shown relatively little impact from tariffs, though economists warn that those shockwaves could still show up in the future.
While expectations have improved, Hsu said that they remain “above readings seen throughout the second half of 2024, reflecting widespread beliefs that trade policy may still contribute to an increase in inflation in the year ahead.”
“Despite this month’s notable improvement, consumers remain guarded and concerned about the trajectory of the economy,” she concluded.
The final data for June will be released Friday, June 27 at 10 a.m. ET.
