U.S. Consumer Sentiment Improves Much More Than Expected In July

(RTTNews) - Consumer sentiment in the U.S. has improved by much more than expected in the month of July, according to preliminary data released by the University of Michigan on Friday.

The University of Michigan said its consumer sentiment index jumped to 54.4 in July from 49.5 in June. Economists had expected the index to rise to 51.3.

With the bigger than expected increase, the consumer sentiment bounced further off the record low set in May and reached its highest level since hitting 56.5 in February.

The report said the current economic conditions index surged to 54.9 in July from 47.7 in June, while the index of consumer expectations shot up to 54.0 in July from 50.7 in June.

"This month's rise in sentiment was pervasive across the population, seen across groups by age, income, wealth, and political party," said Surveys of Consumers Director Joanne Hsu. "Particularly strong increases were seen among consumers without a bachelor's degree."

"However, with prices remaining frustratingly high, consumers are hardly ebullient about the economy; sentiment is down 12% from a year ago," she added. "Thus, sentiment's upward momentum may prove difficult to sustain if recent declines in gas prices continue to reverse course."

Hsu noted that more than 70 percent of interviews for this report were completed before the resumption of U.S. strikes against Iran on July 7th and the subsequent increase in gas prices.

The report said year-ahead inflation expectations fell to 4.2 percent in July from 4.6 percent but still substantially exceed the 3.4 percent seen in February before the Iran conflict began

Long-run inflation expectations held steady from last month at 3.3 percent, remaining a bit higher than the 2.8 to 3.2 percent range seen in 2024, the University of Michigan said.