Lower fuel prices lifted consumer confidence in June, though Americans remain concerned about the cost of living and future price increases.
US consumer sentiment improved in June as easing inflation expectations and lower gasoline prices boosted household confidence, though concerns about the rising cost of living continue to weigh on Americans.
The University of Michigan’s final consumer sentiment index rose to 49.5 in June from a record-low 44.8 in May, according to survey data released Friday. The reading was higher than the preliminary estimate but remained the second-lowest level recorded since the survey began in the 1970s.
Consumers now expect prices to rise 4.6% over the next year, down from 4.8% in May. Longer-term inflation expectations also moderated, with respondents forecasting annual price increases of 3.3% over the next five to 10 years, reversing the sharp increase reported a month earlier.
Also Read: Your Marketing Dashboard Is Lying to Your CFO
Falling gasoline prices played a key role in improving sentiment. Average fuel prices have declined by more than 60 cents per gallon in recent weeks, boosting confidence across income groups and political affiliations.
Despite the improvement, financial pressures remain widespread.
“The cost of living remains at the forefront of consumers’ minds,” Joanne Hsu, director of the University of Michigan’s Surveys of Consumers, said in a statement. “More than half of consumers spontaneously mentioned that high prices are weighing on their personal finances.”
The survey’s gauge of current economic conditions also improved in June but remained close to historic lows. Consumers’ assessments of their personal finances strengthened modestly from May, though they remained near their weakest levels since 2009.
At the same time, household spending has remained resilient. Government data released earlier this week showed inflation-adjusted consumer spending accelerated in May, suggesting demand has held up despite persistent price pressures.
Looking ahead, Americans expressed greater optimism about their future financial prospects and the broader economy. The survey’s expectations index climbed to its highest level in three months.
Hsu said the findings indicate consumers expect the economic impact of the recent Iran conflict to be temporary rather than long-lasting.
Also Read: AI Marketing Needs More Than Behavioral Data
An interim agreement between the United States and Iran has helped maintain shipping through the Strait of Hormuz, supporting global oil supplies and lowering energy prices. However, households could still face higher prices for some goods in the coming months as elevated transportation and material costs continue to filter through supply chains.
The survey, conducted between May 19 and June 22, found that durable goods buying conditions remained weak despite the broader improvement in consumer confidence.
