Preliminary: Consumer sentiment increased 4.9 points in July

Consumer sentiment rose 4.9 points from a month earlier in July to 54.4, but was still down 7.3 points from a year earlier, according to preliminary results from a University of Michigan consumer survey. The index of current economic conditions rose by 7.2 points from the previous month to 54.9, but fell by 13.1 points from the previous year. Consumer expectations rose 3.3 points to 54.0, but were 3.7 points lower than the July 2025 index.

With jumps of 10% for the second month in a row, consumer sentiment climbed to its highest reading since February this year on the back of an easing of price pressures at the pumps in recent weeks. All five components of the index improved, led by a significant 20% increase in durable goods purchase conditions, as well as year-ahead business conditions. This month’s uptick in sentiment was pervasive across the population, visible across age, income, wealth and political party groups. A particularly strong increase was recorded among consumers without a bachelor’s degree. However, with prices still frustratingly high, consumers are hardly enthusiastic about the economy; sentiment fell by 12% compared to the year before. Therefore, it could prove difficult to maintain the upward momentum in sentiment if the recent declines in gas prices continue to reverse course. Interviews for this edition ran from June 23 to July 13, with more than 70% completed before the resumption of US attacks on Iran on July 7 and the subsequent increase in gas prices.

Inflation expectations for the year ahead decreased from last month to a still high 4.2% this month. The current reading is still higher than the 3.4% reading recorded in February before the start of the Iran conflict, along with all of the 2024 readings. Longer-term inflation expectations remained steady from last month at 3.3% in July, remaining slightly higher than the range of 2.8% to 3.2% seen in 2024.

Read University of Michigan Consumer Surveys rid.