The latest data confirms a mixed outlook: consumer sentiment improves but inflation still worries shoppers across the United States. The University of Michigan’s Consumer Sentiment Index saw a 16% jump in June. This marked the first increase in six months. Optimism rose as expectations for personal finances and business conditions climbed over 20%. However, sentiment remains 18% lower than post-election levels in December. Many Americans still fear an economic slowdown.
Moreover, consumer sentiment improves but inflation still worries shoppers because inflation risks persist. Year-ahead expectations fell from 6.6% in May to 5% in June. Long-run expectations also dropped from 4.2% to 4%, the lowest in recent months. Although that trend seems promising, concerns haven’t vanished. Tariff impacts on inflation remain a major issue. Consumers feel uneasy about rising prices and uncertain policy directions.
Interestingly, this contrasts with The Conference Board’s June report. That index fell from 98.4 in May to 93. Expectations dipped below the recession warning level of 80, landing at 69. Even though inflation expectations eased to 6% in that report, other concerns remain. High prices, interest rates, and global tariffs continue to affect consumer outlook. In fact, many shoppers expect higher prices to continue.
A separate report by PYMNTS Intelligence found that 60% of Americans feared tariffs would raise prices. Only 35% believed tariffs would lead to mostly positive outcomes. Spending habits reflect this tension. On the same day the sentiment index was released, the Bureau of Economic Analysis revealed a drop in real disposable income for May. Spending also slipped.
Personal consumption fell 0.1% in May, after a 0.2% decline in January. Durable goods spending dropped 1.8%. Nondurables also decreased by 0.2%. Retail patterns are shifting as a result. Big-box and discount stores are seeing new traffic. Dollar General, for example, noted a rise in high-income shoppers.
CEO Todd Vasos said June 3 that trade-in customer rates hit a four-year high. Clearly, consumer sentiment improves but inflation still worries shoppers, shaping how and where they spend.
For more business updates, visit DC Brief.
