US Consumer Sentiment Hits Five-Month High on Gas Price Relief

US consumer sentiment jumped to its highest level since February as falling gasoline prices boosted confidence, the University of Michigan’s preliminary index showed. The reading rose to 54.4 in July from 49.5 in June, the survey said. All five components of the index improved, with buying conditions for durable goods and expectations for business conditions over the coming year each surging roughly 20%. Sentiment rose across age, income, wealth, and political affiliation groups, the data showed. Even so, overall confidence remained well below year-ago levels, indicating many households still feel the pinch of elevated prices.

The survey was conducted between June 23 and July 13, with more than 70% of interviews completed before the resumption of US strikes on Iran and the subsequent rebound in gasoline prices, the University of Michigan said. The gain may therefore not fully capture the impact of renewed geopolitical tensions on household expectations, particularly if higher energy prices feed back into broader inflation concerns.

Inflation expectations moderated in July. Consumers’ one-year outlook eased to 4.2% from 4.6%, though it remained well above the 3.4% reading in February before the Iran conflict and above levels seen throughout 2024. Longer-term inflation expectations were unchanged at 3.3%, staying above the 2.8% to 3.2% range that prevailed last year, the survey showed. The data pointed to households becoming less pessimistic about near-term conditions but still uncertain about inflation returning sustainably to the Fed’s target.