Consumer sentiment surged in June, according to a preliminary reading in a survey by the University of Michigan — the first improvement in six months, suggesting American shoppers enjoyed a fresh burst of optimism as President Donald Trump rolled back some of his tariffs and economic conditions, from the job market to inflation, stayed healthy.
The Michigan index of consumer sentiment climbed 16% from last month after having fallen near a record low. “I think this is a pretty significant sign that the worst—the peak pessimism—is behind us,” Tom Simons, chief U.S. economist at Jefferies, told The Wall Street Journal.
Inflation expectations for the coming year plunged to 5.1% from 6.6%, and longer-run expectations edged lower, to 4.1%.
“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, the Michigan survey director, said in a statement. “However, consumers still perceive wide-ranging downside risks to the economy. 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.”
Worries about Trump’s trade war and the economy may have eased some, but they aren’t gone. The sentiment index is about 20% below its level from the end of last year, and while inflation has so far defied expectations of a tariff-fueled jump, expectations for price increases are still higher than they were in the second half of 2024.
Economists still expect the impact of the tariffs will become much more visible this summer. “Inflation is very likely going to increase,” Marc Giannoni, chief U.S. economist at Barclays, told The New York Times. “It is a question of time, not so much of if.”
What’s next: Federal Reserve officials are still waiting to see where the economy goes from here. They are expected to hold interest rates steady after a two-day meeting on Tuesday and Wednesday of next week. The University of Michigan’s final reading on June consumer sentiment is scheduled to be released on June 27.