| Consensus | Consensus Range | Actual | Previous | |
| Index | 51.3 | 50.0 to 52.0 | 54.4 | 49.5 |
| Year-ahead Inflation Expectations | 4.2% | 4.6% | ||
| Index Change | 4.9 | 0.6 | ||
| Index % Change | 9.9% | 1.2% |
Highlights
U.S. consumer sentiment improved again this month, with July’s preliminary reading coming in at 54.4 vs. 49.5 in June and 44.8 in May. This is above the consensus of 51.3 in the Econoday survey of forecasters. Consumer sentiment improved by 9.9 percent, boosted against by what might prove to be a temporary moderation in gasoline prices.
However, sentiment is down 11.8 percent from July 2025 as affordability concerns continue to weigh on the minds of consumers.
“[W]ith prices remaining frustratingly high, consumers are hardly ebullient about the economy,” the report said.
“Thus, sentiment’s upward momentum may prove difficult to sustain if recent declines in gas prices continue to reverse course,” it added.
Preliminary year-ahead inflation expectations dipped to 4.2 percent in July from 4.6 percent in June. This significantly exceeds the 3.4 percent reading seen in February before the Iran conflict began, along with all 2024 readings, the report said.
Long-run inflation expectations in July held at 3.3 percent from last month, staying above the 2.8 percent to 3.2 percent range seen in 2024.
Market Consensus Before Announcement
The consensus sees sentiment up to 51.3 in the first July reading from 49.5 in June and up from 44.8 in May. That more optimistic reading for July would precede the impact of latest uptick in gas prices in the last few days.
Definition
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.
Description
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.
