But sentiment, as measured by the University of Michigan, is lower than in June 2024
June 16, 2025
- Consumer sentiment rebounded sharply in June, rising 16% from May, though still 20% below its December 2024 peak.
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Inflation expectations dropped significantly, with short-term forecasts falling to their lowest in three months.
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Despite improved outlooks, consumers remain cautious due to lingering concerns over tariffs and economic volatility.
So far, tariffs havent spiked the inflation rate, the job market remains stable and consumers may be getting used to the new volatility. The University of Michigan Survey of Consumers shows the Index of Consumer Sentiment rose more than 15% from May, but is still down 11.3% year-over-year.
The rebound also leaves sentiment roughly 20% below levels recorded in December 2024, when optimism surged in the aftermath of the presidential election. According to the latest consumer survey data, the June bounce was broad-based, cutting across all demographics, including age, income, wealth, political affiliation, and geographic region.
All five components of the consumer sentiment index showed gains in June. Expectations for both short- and long-term business conditions saw steep increases, reflecting a perception that some economic uncertainty stemming from recent tariff hikes is beginning to subside.
The decline in consumer sentiment began in April, when President Trump announced a series of steep tariffs on imported goods. That policy turbulence initially shocked consumers, disrupting confidence in the broader economic trajectory.
However, the latest consumer sentiment data collected by the University of Michigan suggests that many Americans are beginning to adapt to this new landscape. But while the shock of policy volatility appears to be easing, concerns remain.
Lingering economic concerns
Despite June’s significant gains, consumers appear to remain wary. Their outlook on business conditions, personal finances, major purchases, labor markets, and the stock market all remain markedly lower compared to the sentiment highs of December 2024.
The persistent gap may underscore the continued presence of wide-ranging downside risks, as consumers try to gauge the economys long-term stability amid ongoing trade policy uncertainty.
Perhaps the brightest spot in the report was a significant drop in inflation expectations. Year-ahead inflation estimates fell from 6.6% in May to 5.1%a 1.5 percentage point decline and the lowest reading in three months. Long-term inflation expectations also edged down slightly from 4.2% to 4.1%.
These shifts suggest that consumers are beginning to believe the inflationary impact of tariffs may not be as severe as initially feared. Still, both short- and long-run expectations remain elevated compared to the second half of 2024, indicating lingering unease about how trade policy could influence prices in the year ahead.
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