U.S. consumer sentiment saw very little change from last month and came in at expectations, with July's final reading coming in at 61.7 vs. 60.7 in June and 52.2 in May. This is just below the consensus of 61.8 in the Econoday survey of forecasters.

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

"A rise in sentiment among stockholders was partially offset by a decline among consumers who do not own stocks, the report said. Although recent trends show sentiment moving in a favorable direction, sentiment remains broadly negative. Consumers are hardly optimistic about the trajectory of the economy, even as their worries have softened since April 2025."

The final year-ahead inflation expectations again declined significantly to 4.5 percent in July from 5.0 percent in June.

Long-run inflation expectations in July fell to 3.4 percent from 4.0 percent last month, the third consecutive monthly decline.

The sentiment index is expected unrevised at 61.8 for the July final from the flash. This would be well up from the April low of 52.2 and up from 60.7 in the June final.

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.