University of Michigan reports 10% rise in consumer sentiment in June
The index climbed to 49.5 from May's record low of 44.8, but remains historically depressed as inflation fears and geopolitical tensions linger
American consumers are feeling slightly less terrible about the economy. The University of Michigan’s final Index of Consumer Sentiment for June 2026 came in at 49.5, up 10.5% from May’s 44.8, a figure that represented the lowest reading ever recorded by the survey.
Two forces appear to be pulling sentiment off the floor: moderating gasoline prices and a meaningful decline in long-term inflation expectations.
Year-ahead inflation expectations eased to 4.6%, while long-run expectations dropped to 3.3%.
The improvement wasn’t confined to one demographic pocket. Sentiment rose across age groups, education levels, and political affiliations. Lower-income households led the charge, which makes sense: those consumers are most exposed to energy costs and grocery inflation, so any relief there registers immediately.
The preliminary reading, released on June 12, had pegged sentiment at 48.9. The final number of 49.5, published June 26, came in slightly higher, suggesting conditions continued to stabilize through the month rather than fading after an initial pop.
Context matters here. May’s record-low reading of 44.8 was a direct product of the Iran conflict, which had hammered consumer confidence through a combination of energy price spikes, supply chain disruptions, and the general anxiety that accompanies any major geopolitical crisis.
Before the Iran conflict escalated earlier this year, consumer sentiment was already under pressure from persistent inflation and elevated interest rates. The geopolitical crisis simply accelerated a decline that was already underway, pushing the index into territory it had never previously visited.
Consumer spending accounts for roughly two-thirds of US GDP, so even small shifts in household behavior carry outsized economic significance.
Long-run inflation expectations at 3.3% remain above the Federal Reserve’s 2% target, which means rate cuts are unlikely to arrive as quickly as markets might hope. The index remains well below the historical norm of around 84, indicating persistent uncertainty among consumers.