News Summary

Recent data from the University of Michigan highlights a dramatic decline in consumer sentiment, reaching historic lows despite a small recovery in June. The Michigan Index of Consumer Sentiment saw a 29% drop in early 2025, with a slight bounce to 60.5 in June. Despite this uptick, consumer outlook remains bleak, indicating concern over job security and rising inflation. Economic experts emphasize the need for continued monitoring of consumer sentiment as a critical indicator of economic health.

Ann Arbor, Michigan – Consumer Sentiment Hits Record Low Despite Slight June Improvement, Signals Economic Caution Ahead

The University of Michigan’s monthly survey reveals that consumer sentiment among U.S. households has drastically declined, achieving one of the lowest levels in recorded history. This downward trend indicates significant economic caution as consumers express a negative outlook on prices, business conditions, incomes, and job security.

Data from the survey shows that the Michigan Index of Consumer Sentiment plummeted by 29% in the first four months of 2025, maintaining historically low levels throughout the spring. A slight upward movement occurred at the beginning of June, when the Index rose to 60.5, representing its highest reading since February. However, despite this modest improvement, consumer sentiment remains significantly low—11.3% lower than the same period last year.

Currently, the Index stands at 28.4% below its average reading of 84.4 and 27.4% below its geometric mean of 83.3 since 1978. This indicates a sustained climate of consumer pessimism, with recent sentiment readings suggesting that Americans anticipate rising prices and a slowing economy in the upcoming year.

Overview of June’s Improvement

The improvement observed in June marks the first increase in six months, attributed primarily to perceived easing of pressures related to recent tariff policies. All five components of the consumer sentiment index saw increases, indicating a broad member agreement across age groups, income levels, political affiliations, and geographical areas. Notably, the Consumer Expectations Index experienced a substantial increase of 21.9% from the previous month, while the Current Economic Conditions Index rose by 8.1%.

In addition, year-ahead inflation expectations have fallen from 6.6% to 5.1% in June, reaching their lowest levels in three months. However, it is noteworthy that long-term inflation expectations continue to remain elevated.

Consumer Job Outlook

Despite some signs of improvement, concerning trends prevail among consumer expectations for the job market. Approximately two-thirds of respondents in the survey expect unemployment rates to rise within the next year—this figure is the highest recorded since 2009. Such sentiment indicates a growing concern over job security, despite the fact that the recent sentiment decline has not drastically affected predictions for consumer spending growth. Reports suggest that, as of now, there are no major private-sector layoffs on the horizon.

Understanding Consumer Sentiment

The study on consumer sentiment illustrates that low sentiment levels do not necessarily correlate directly with consumer behavior or confidence. The director of surveys at the University of Michigan highlights that the current negative sentiment is not attributed to any particular policy; instead, it reflects a broader perception of economic decline among consumers.

As consumers continue to face uncertainty regarding prices and job security, economic experts will be closely monitoring forthcoming survey results to gauge shifts in consumer behavior and spending patterns. The current climate underscores the importance of understanding public sentiment as a key indicator of the overall economic landscape.

Deeper Dive: News & Info About This Topic

• Bloomberg: University of Michigan Consumer Sentiment Index
• Wikipedia: Consumer Sentiment
• Advisor Perspectives: Consumer Sentiment Rebounds in June
• Google Search: Consumer Sentiment Index
• Investing.com: Core PCE Price Index Consumer Sentiment Data
• Encyclopedia Britannica: Consumer Sentiment
• Reuters: US Consumer Sentiment Improves in June
• Google Scholar: Consumer Sentiment
• Axios: Tariffs and Consumer Sentiment
• Google News: Consumer Outlook

Author: HERE Novi