US Consumer Sentiment Jumps as Inflation Expectations Improve
US consumer sentiment rose by the most since January 2024 as concerns about the economy eased and short-term inflation expectations showed a marked improvement.
The preliminary June sentiment index rose 8.3 points from a month earlier to 60.5, according to the University of Michigan. The figure easily topped all expectations in a Bloomberg survey of economists.
Consumers expect prices to rise at a 5.1 percent rate over the next year, the data released on Friday showed. That is down from 6.6 percent in May and marks the steepest monthly drop since October 2001.
They saw costs rising at an annual rate of 4.1 percent over the next five to 10 years, compared with 4.2 percent in May.
The increase in the sentiment gauge is the first this year and shows less anxiety surrounding President Donald Trump's protectionist trade policy. The survey showed a sharp improvement in expectations for the economy and the biggest rise in expectations of personal finances in more than three years.
At the same time, their views of business conditions, finances and buying conditions are still below levels seen at the end of last year.
'Consumers appear to have settled somewhat from the shock of the extremely high tariffs announced in April and the policy volatility seen in the weeks that followed,' Joanne Hsu, director of the survey, said in a statement. 'However, consumers still perceive wide-ranging downside risks to the economy.'
A sustained improvement in sentiment may help ease concerns among economists and businesses about consumer spending and economic growth prospects.
The tempering of concerns about inflation due to higher tariffs follows reports this week that showed price pressures remain modest. A measure of underlying inflation that excludes the often-volatile food and energy categories rose just 0.1 percent in May.
The survey, conducted May 27 through June 9, concluded just days before an announced trade framework between the US and China. Under the agreement, both countries consented to maintain tariffs at their existing levels.
The survey showed the expectations index jumped 10.5 points, the most since December 2023, to 58.4. The current conditions gauge increased to a three-month high of 63.7 from 58.9.
Sentiment improved along political groups. A gauge of sentiment among Republicans increased to the highest level since October 2020. Confidence among Democrats and political independents rose to three-month highs.
By Nazmul Ahasan
Learn more:
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