Consumer sentiment experienced a notable uptick in June, rebounding from historic lows as gasoline prices began to ease. Preliminary results from the University of Michigan’s Surveys of Consumers indicate that the Index of Consumer Sentiment improved by approximately four index points, or 9%, compared to May.
This positive shift was observed across various demographics, with sentiment improving among consumers of all ages, education levels, and political affiliations. Joanne Hsu, Director of the Surveys of Consumers, specifically attributed these gains to the decline in gas prices during early June. Hsu highlighted that “Lower-income consumers exhibited a particularly strong sentiment increase, consistent with the fact that gasoline comprises a larger share of their budgets.”
Reversal from Record Lows
The latest data marks a significant turnaround for consumer sentiment, which had previously plummeted to successive record lows. The index reached its lowest point in May, a decline primarily fueled by escalating gas price worries and broader concerns related to the conflict in the Middle East. This May reading followed an earlier record low set just a month prior in April, driven by the same factors. These consecutive readings represented the lowest levels recorded in the over 73-year history of the Index of Consumer Sentiment.
Further corroborating these trends, The Conference Board’s Consumer Confidence Index, released on May 26, also reported a fall in consumer confidence for May. This decline was similarly linked to gas prices and anxieties surrounding war-related inflation. The Conference Board noted at the time that consumers’ write-in responses regarding economic influences continued to “skew towards pessimism” in May, with references to prices and oil and gas increasing for the second consecutive month.
Persistent Inflation Concerns Remain
Despite the encouraging gains seen in early June, consumer sentiment, as measured by the latest University of Michigan survey, still remains 13% below its level in January and a substantial 19% lower than in June 2025. Hsu emphasized that consumers continue to be preoccupied with “kitchen table issues.”
“They feel burdened by the recent escalation in inflation and worry that higher inflation could remain stubborn going forward, particularly in the short run,” Hsu stated. The preliminary results for June gauged consumers’ year-ahead inflation expectations at 4.6%. While this figure is down from the 4.8% recorded in May, it remains significantly above the 3.4% reading observed in February, prior to the onset of the Iran conflict. Consumers’ long-run inflation expectations registered 3.4%, a decrease from 3.9% recorded in June.
The rebound in consumer sentiment, primarily driven by a reprieve at the gas pump, offers a glimmer of optimism. However, the persistent concerns over broader inflationary pressures underscore the fragile nature of this recovery and the continued economic anxieties facing households.
