U.S. consumer sentiment continues its mini revival following the pause in trade tensions between the U.S. and China, with June's final reading coming in at 60.7 vs. the flash estimate of 60.5, and 52.2 in May. This is just above expectations for 60.5 in the Econoday survey of forecasters.

The rebound still has a long way to go however, and remains well off the levels reached following the November 2024 elections.

"[C]onsumer views are still broadly consistent with an economic slowdown and an increase in inflation to come, the report said. Consumers continue to be concerned about the potential impact of tariffs, but at this time they do not appear to be connecting developments in the Middle East with the economy."

The preliminary year-ahead inflation expectations declined significantly to 5.0 percent in June from 6.6 percent in May.

Long-run inflation expectations in June dipped to 4.0 percent from 4.2 percent last month.

Sentiment expected unrevised at 60.5 in the final June report from the preliminary, way up from a low low 52.2 in May.

The University of Michigan's Consumer Survey Center questions households each month on their assessment of current conditions and expectations of future conditions. Preliminary estimates for a month are released at mid-month and are based on about 420 respondents. Final estimates are released near the end of the month and are based on about 600 respondents.

The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer sentiment index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.