Consumer Sentiment Rebounds Slightly In June as Gas Prices Moderate

Consumer sentiment ticked up in June, according to a long-running survey conducted by the University of Michigan, reversing a slide that began after the United States and Israel launched strikes against Iran in February. 

The consumer sentiment data released on Friday, June 26, rose to 49.5 from 44.8 in May. Economists polled by The Wall Street Journal had been expecting a reading of 49. 

Consumer sentiment improved off an all-time low as news of a ceasefire agreement in the Iran war and a retreat in gas prices arrived amid a backdrop of gas prices that remain stubbornly high and unease over inflationary spikes since the COVID-19 pandemic. The national average for a gallon of gas has slipped below $4 per gallon, more than 10 percent lower than prices a month ago, according to data from the AAA motor club. 

Surveys of Consumers Director Joanne Hsu said in a statement, “Consumer sentiment confirmed its early-month reading, rising about 10 percent above May as gas prices moderated. Increases were seen across income, wealth, and political affiliation. Expected business conditions over the next five years surged 16 percent as consumers’ worries over the long-term consequences of the Iran conflict appear to be easing. Still, sentiment remains in unfavorable territory at 13 percent below the February 2026 reading prior to the start of the Iran conflict, and nearly 20 percent less than a year ago. The cost of living remains at the forefront of consumers’ minds; for the third straight month, over half of consumers spontaneously mentioned that high prices are weighing down their personal finances. 

“Year-ahead inflation expectations inched down from 4.8 percent in May to a still-elevated 4.6 percent this month. The current reading substantially exceeds the 3.4 percent reading seen in February before the Iran conflict began, along with all 2024 readings. Long-run inflation expectations fell back from 3.9 percent last month to 3.3 percent in June, remaining a bit higher than the 2.8 percent to 3.2 percent range seen in 2024.” 

Image courtesy Costco / Chart courtesy University of Michigan