The latest University of Michigan Consumer Sentiment Index, released July 31, showed that Americans are optimistic about the economy. With June’s number at 49.5, the final July index of 55.2 represents a worthy uptick, showing that consumers are becoming more positive about their personal financials and the ongoing economic environment. 

“Consumer sentiment confirmed its early-month reading, landing almost 12% above June,” said Joanne Hsu, director of the Surveys of Consumers at University of Michigan. “Broad-based improvements were seen across all groups by income, education, wealth, age and political party. Five-year expected business conditions reached a 12-month high, though it remains well under its historical average.”

Year-ahead inflation expectations ticked down from 4.6% in June to a still-elevated 4.2% this month. The current reading substantially exceeds the 3.4% seen in February before the Iran conflict began, along with all 2024 readings. Long-run inflation expectations held steady from last month at 3.3%, remaining a bit higher than the 2.8% to 3.2% range seen in 2024.  “Despite recent gains, sentiment is 11% below a year ago, reflecting a generally somber view of the economy amid five years of elevated inflation and persistent high prices,” added Hsu. “Consumers remain focused on pocketbook issues like purchasing power, while political or military developments remain more in the background.”

The survey took place June 23-27. The improvement was impressive considering average gasoline prices rising ​back above $4 a gallon and ongoing hostilities ​in the Middle East.

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