The University of Michigan index climbed to 48.9 from a record low 44.8 in May, but inflation expectations remain well above pre-war levels
Michael Nagle/Bloomberg via Getty Images
U.S. consumer sentiment rose in early June for the first time in four months, as a pullback in gasoline prices gave households some relief after months of war-driven price pressure. A preliminary reading of 48.9 for the month marked a roughly 9% climb from May's record low of 44.8, the University of Michigan's Consumer Sentiment Index showed.
The improvement was broad-based, spanning age, education, and political affiliation, according to the survey. Households at the lower end of the income scale posted the biggest improvements, which tracks with gasoline taking up a disproportionately large share of what those families spend. Assessments of both current conditions and future expectations rose from May's historic lows, though both gauges remain near the bottom of their historical range.
"This month, consumer sentiment ticked up about four index points, or 9%, with consumers experiencing some relief due to the early-month easing in gasoline prices," Joanne Hsu, director of the university's Surveys of Consumers, said in a statement. "Even with June's early gains, however, views of the economy are still relatively dour."
Inflation expectations moved in a favorable direction but stayed at levels that would have been considered alarming before the war with Iran began. Over the coming year, respondents projected a 4.6% inflation rate, a tick below May's 4.8% reading; their longer-horizon view, covering five to ten years out, retreated to 3.4% after surging to 3.9% the prior month. Both readings exceed the 2.8% to 3.2% range that prevailed throughout 2024. Economists polled by Reuters had forecast the headline index rising to 46.0, according to Reuters.
Sentiment is still 13% below its Jan. 2026 level and nearly 20% below where it stood a year ago. A separate government report published earlier in the week put May's annual consumer price increase at 4.2%, the steepest such reading in over three years, Bloomberg noted.
June's improvement ends a streak of four consecutive monthly declines stretching back to February, when the outbreak of hostilities between the U.S.-Israeli coalition and Iran began jolting energy markets. The war disrupted oil flows through the Strait of Hormuz and pushed gas prices to a national average above $4.50 per gallon throughout May, as reported when May's record low was set. The trough reached in May undercut every benchmark in the survey's seven-decade history, a record worse than those set amid the stagflation of the 1970s, the 2008-09 financial crisis, and the pandemic-era contraction.
In her statement, Hsu said pocketbook concerns continue to dominate the public's thinking, with many respondents expressing unease that price pressures "could remain stubborn going forward, particularly in the short run." Fieldwork for the survey ran from May 19 through June 8. Final June results are scheduled for release on June 26.
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