Financial News: U.S. Consumer Sentiment Improves Much More Than Expected

U.S. Consumer Sentiment Improves Much More Than Expected In June

(RTTNews) - Preliminary data released by the University of Michigan on Friday showed a substantial improvement by consumer sentiment in the U.S. in the month of June.

The University of Michigan said its consumer sentiment index surged to 60.5 in June after holding at 52.2 in May. Economists had expected the index to rise to 53.5.

"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," said Surveys of Consumers Director Joanne Hsu.

"However, consumers still perceive wide-ranging downside risks to the economy," she added. "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."

The sharp increase by the headline index partly reflected a significant improvement in consumer expectations, with the index of consumer expectations spiking to 58.4 in June after inching up to 47.9 in May.

The current economic conditions index also shot up to 63.7 in June from 58.9 in May, increasing for the first time in six months.

The report also said year-ahead inflation expectations plunged to 5.1 percent in June from 6.6 percent in May, hitting a three-month low.

Long-run inflation expectations also edged down to a three-month low of 4.1 percent in June from 4.2 percent in May.

"Consumers' fears about the potential impact of tariffs on future inflation have softened somewhat in June," said Hsu.

She added, "Still, inflation expectations remain above readings seen throughout the second half of 2024, reflecting widespread beliefs that trade policy may still contribute to an increase in inflation in the year ahead."

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