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Ann Arbor Times

Wednesday, September 10, 2025

Consumer sentiment rises but remains cautious amid economic concerns

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Santa J. Ono, President, University of Michigan - Ann Arbor | University of Michigan - Ann Arbor

Santa J. Ono, President, University of Michigan - Ann Arbor | University of Michigan - Ann Arbor

Consumer sentiment has shown improvement for the first time in six months, increasing by 16% from last month. However, it remains about 18% below December 2024 levels, when there was a post-election boost.

Economist Joanne Hsu, director of the University of Michigan’s Survey of Consumers, noted that improvements were observed across various demographics and regions. The positive change is linked to a perceived easing of tariff pressures. "Consumers feel they have some breathing room given that the historically high tariffs announced earlier this year have not been sustained," Hsu stated.

Despite these improvements, consumers remain cautious about the economy. While they are no longer expecting the worst-case scenario, concerns about higher inflation and an economic slowdown persist. Labor market expectations have improved but are still worse than at the beginning of the year. Currently, 57% expect unemployment to rise in the coming year, down from 66% in March.

Expectations for personal income growth have also seen modest improvement this month but remain lower than six months ago. Although confidence in personal finances increased by 17% from May's low levels, it is still 17% below December 2024 figures.

Tariffs continue to influence consumer views on the economy. In June, unsolicited comments about tariffs came from about 59% of consumers, a decrease from last month's 66%. This marks three consecutive months where a majority mentioned tariffs.

The Consumer Sentiment Index rose to 60.7 in June from May's 52.2 but remains below last June's figure of 68.2. The Current Index increased to 64.8 from May's 58.9 and remains under last June's level of 65.9. The Expectations Index climbed to 58.1 from May's 47.9 but is below last June’s figure of 69.6.

The Surveys of Consumers conducted by the University of Michigan Institute for Social Research uses a rotating panel survey based on a nationally representative sample within the coterminous U.S., ensuring equal selection probability for households.