Buoyed by lower gas prices, U.S. consumer sentiment rose to a five-month high in early July, according to a popular survey from the University of Michigan.
The preliminary reading of the Index of Consumer Sentiment rose nearly 10% to 54.4, up from 49.5 in June.
“This month’s rise in sentiment was pervasive across the population, seen across groups by age, income, wealth, and political party,” survey director Joanne Hsu said. “Particularly strong increases were seen among consumers without a bachelor’s degree.”
The retail sales numbers may reflect some of that buoyancy. Retail sales rose 0.2% in June, notching a fifth straight month of growth, the Commerce Department reported Thursday. The declining price of gas in June actually lowered the growth figure, as sales at gas stations fell; excluding fuel, retail sales rose a solid 0.7%.
Still, prices remain painfully high for many consumers, and sentiment is 12% lower than a year ago. With gas prices rising again following the flare-up of fighting between the United States and Iran, the improvement in sentiment may be difficult to sustain, Hsu said. The survey interviews were conducted between June 23 and July 13, with 70% of them completed before the war reignited, and the final sentiment reading that will be released at the end of the month may reflect more frustrations associated with rising gas prices.
Outlook worsening: A separate survey from CNBC suggests that Americans are unhappy with the economy under President Trump and expect conditions to worsen in the future.
“Despite a booming stock market and improving inflation numbers, the public is as depressed about the economy as it has been since the years just after the pandemic and increasingly concerned about the cost of everyday goods,” CNBC’s Steve Liesman wrote Friday.
The CNBC All-America Economic Survey, which included 1,000 registered voters nationwide, found that 61% of respondents said they are pessimistic about the economy and the economic outlook. That’s the worst result since late 2023, when the U.S. economy was climbing out of Covid-era instability. Just 25% of respondents said they were optimistic about the economy and the outlook.
Micah Roberts, a Republican pollster who worked on the survey, said the results don’t bode well for the GOP this fall. “More voters expect things to get worse by a 41/29% margin, leaving the electorate in a distinctly sour mood heading into the midterm election cycle,” he said.
Significant numbers of people said they were cutting back on purchases due to high prices. About two-thirds said they were buying fewer nonessentials, such as entertainment and dining out, and nearly half said they were skimping on essentials, including food and medical care.
The results varied considerably by income. Sixty percent of those with incomes under $30,000 a year said they were cutting back, compared to just 35% of those with incomes over $100,000.
“People are still paying a lot more for stuff than they were a year and a half ago, two years ago, and that’s recent enough in memory that it still hurts and it still drives a lot of anger,″ Jay Campbell, the Democratic pollster for the survey, said. “When gas prices drop 50 cents for a month, that’s just not enough to make up the difference.”
Trump approval suffers: Trump’s approval rating remained underwater in the survey, with 59% of respondents saying they disapprove of his overall performance and 60% saying they disapprove of his performance on the economy. Survey respondents also expressed disapproval of Trump’s handling of the Iran war (63% disapproval) and inflation (68% disapproval).
Those low marks don’t necessarily mean that Democrats are poised to sweep the midterm elections. Campbell said the data points to a modest four-point advantage for Democrats, but not an overwhelming wave in November, at least not at this point in the cycle.
The bottom line: Americans welcome relief from high prices at the gas pump, but inflation and the overall condition of the economy remain serious concerns for voters heading into the fall.