In a surprising turn of events, consumer sentiment experienced a significant surge in the first half of June, marking its first rise in six months and its most substantial monthly increase since January 2024.
This data, released by the University of Michigan, indicates a sharp rebound in optimism following weeks of steady economic data, including mild inflation reports and a series of trade announcements from the Trump administration.
As reported by Breitbart, the university's closely monitored index of consumer sentiment leaped to 60.5 in early June, up from 52.2 the previous month. This 16 percent gain surpassed all estimates in a Wall Street Journal survey of economists. The expectations sub-index saw an even more significant surge, with a 21 percent increase marking the largest one-month gain since late 2023.
This surge in optimism comes on the heels of the Trump administration's efforts to restore long-term stability to U.S. supply chains without reigniting price pressures. The rise in sentiment was widespread, with improvements noted across all demographics, including age, income, wealth, political party, and geographic region, according to the survey's director, Joanne Hsu. This includes gains among Democrats, Republicans, and independents alike, with a particularly strong jump in expectations for business conditions and personal finances.
In recent months, the sentiment index had been on a downward trend, fueled by media warnings that the Trump administration's reciprocal tariff measures might reignite inflation. However, these fears now appear to be subsiding. Consumers now expect prices to rise 5.1 percent over the next year, down from 6.6 percent in May. This marks the largest one-month decline in short-term inflation expectations since 2001. Long-run expectations also edged lower to 4.1 percent, marking the second consecutive monthly drop.
This dramatic repricing of inflation risks aligns with recent government reports showing that both consumer and producer prices rose just 0.1 percent in May. This defies claims that tariffs would fuel a new wave of cost-push inflation. Instead, prices for goods have remained stable or fallen, and many retailers are now reporting renewed consumer spending strength.
"Consumers' fears about the potential impact of tariffs on future inflation have softened somewhat in June," Hsu said in a statement. This sentiment reversal comes amid signs that the administration's trade negotiations are reducing uncertainty. Late last month, the U.S. and China agreed to maintain current tariff levels as part of a temporary framework, and President Trump has delayed a planned tariff hike on European goods while bilateral talks proceed.
Despite media warnings that April's trade measures would unsettle markets and undermine confidence, the data suggests consumers have grown more confident in the direction of policy. Consumers "appear to have settled somewhat from the shock of the extremely high tariffs announced in April," Hsu said. However, she also noted that overall sentiment remains about 20 percent below December's post-election high, when optimism surged after Trump's re-election.
The June data marks a clear shift in mood, with all five components of the sentiment index rising and expectations for future economic conditions at their highest level since last year. The rebound in sentiment, coupled with falling inflation expectations and renewed wage gains, suggests that American households are adjusting to a new economic landscape.
This landscape is shaped less by the monetary easing of the past decade and more by targeted policies aimed at restoring industrial strength and price stability. The final June sentiment report will be released on June 27, providing further insights into this shift.
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