Mixed signals define consumers' mood as summer settles in

Inflation, job worries, boycotts, tariffs keep concerns looking over their shoulder

By Truman Lewis of ConsumerAffairs

June 30, 2025

• Consumer sentiment in the U.S. improved in June 2025, marking the first increase in six months.

• Despite this uptick, confidence remains below pre-election levels, with concerns over inflation, tariffs, and job security persisting.

• International boycotts and domestic protests reflect broader dissatisfaction with current economic policies.

Consumer sentiment presents a complex picture this summer, with competing indicators showing both improvement and concern. U.S. consumer sentiment rose sharply in June to a four-month high and inflation expectations improved notably as concerns eased about the economic outlook and personal finances.

The University of Michigan’s Consumer Sentiment Index rose to 60.7 in June from 52.2 in May, indicating a 16% increase and the first improvement in half a year. This rebound is attributed to easing inflation expectations and a temporary pause in trade tensions with China.

However, The Conference Board’s consumer confidence index dropped 5.4 points to 93.0 this month, erasing nearly half of the sharp gain in May. Inflation expectations for the year ahead have decreased to 5.0% from 6.6% in May, yet they remain higher than the Federal Reserve’s target.

Additionally, consumer spending and personal income both declined by 0.1% in May, signaling potential softness in the labor market and financial conditions.

Key consumer gripes

Inflation Remains Top Concern: Inflation and high prices wereimportant concerns cited by consumers in June. Despite some cooling, consumers still expect significant price increases ahead, with consumers’ average 12-month inflation expectations to 6.0% (down from 6.4% in May.

Tariff Anxiety: tariffs emerged as a top concern, second only to inflation, prompting many consumers to makeor at least considerchanges in their spending habits. This represents a new worry that has developed throughout 2025.

Job Market Worries: Current employment concerns are weighing on confidence, with the present situation index dropping to its lowest level since October 2024.

Consumer hopes

Personal Financial Optimism: Despite broader economic concerns, consumers’ expectations regarding their Family’s Future Financial Situation improved to a four-month high.

Inflation Relief in Key Categories: Housing and food costs have increased modestly so far in 2025, and gas prices have registered a decrease. This is creating more budget flexibility for discretionary spending.

Spending Resilience: Consumer spending has shown surprising durability, with many Americans maintaining purchase plans despite economic uncertainties.

Persistent doubts

Recession Fears: The share of consumers expecting a recession over the next 12 months rose slightly in June and remained above the levels seen in 2024.

Economic Uncertainty: Trade policy concerns continue to create uncertainty about future economic conditions, with many consumers taking a wait-and-see approach to major purchases.

Mixed Economic Signals: The divergence between different confidence measures reflects genuine consumer confusion about economic direction, with positive personal financial expectations clashing with broader economic pessimism.

This summer’s consumer sentiment reflects Americans’ cautious optimism about their own situations while remaining wary of larger economic headwinds, particularly around inflation and trade policy impacts.

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