Ann Arbor Times

Consumer sentiment in the United States has improved slightly for the second time in six months, according to new data from the University of Michigan Surveys of Consumers. The index increased by less than 2% compared to last month but remains about 17% below levels seen in December 2024, when there was a brief surge following the election.

The survey found that current conditions rose about 5%, reaching their highest level since February 2025. However, expectations for the future declined marginally.

Joanne Hsu, economist and director of the surveys, noted that consumers with stock holdings showed stronger improvements in sentiment than those without. "While consumers may welcome any sign that trade policy is firming, recent announcements have included tariffs that are far higher than seen in recent memory," Hsu said. "Furthermore, substantial uncertainty remains on where tariffs will ultimately land with major trading partners like China. At this time, consumers are unconvinced that the prospect of higher inflation or a deterioration in business conditions has passed, even if they are no longer bracing for a catastrophic worst-case scenario."

Concerns over tariffs remain significant among respondents. About 57% of those surveyed spontaneously mentioned tariffs—down from two-thirds in May—but most believe trade policies could threaten inflation rates, business conditions, and personal finances. Some respondents see possible long-term benefits for the economy.

Tariff worries are especially pronounced among higher-income and college-educated individuals as well as those with large investments in stocks. These groups report some financial gains from strong equity markets but still hold a cautious view of broader economic prospects.

Hsu added that other policy developments such as the recent tax and spending bill had little impact on consumer outlooks based on interview responses.

Labor market expectations also showed slight improvement but remain weaker than one year ago. About 57% of consumers expect unemployment to rise within the next year—a decrease from April's peak but still above levels reported last year. Hsu pointed out that these figures are similar to those recorded during the Great Recession and indicate persistent concerns about job security and income growth.

In July 2025, the Index of Consumer Sentiment reached 61.7 (up from June’s 60.7), while the Current Economic Conditions Index climbed to 68.0 (from June’s 64.8). The Index of Consumer Expectations fell slightly to 57.7 (down from June’s 58.1).

The University of Michigan Surveys of Consumers is conducted by web each month using a nationally representative sample designed to give every U.S. household an equal chance at participation.