Consumer sentiment in the United States saw a significant increase in July, rising by 10% according to the University of Michigan's early reading for the month. This improvement marks the highest sentiment level since February, primarily driven by easing gas prices. The survey's chief economist, Joanne Hsu, noted that gains were observed across all age and income groups. However, much of the data was collected before the U.S. resumed strikes against Iran on July 7, which led to a subsequent increase in gas prices.
Despite the recent rise, consumer sentiment remains below levels seen before the Iran conflict, as reported by the University of Michigan. Long-term inflation expectations have held steady at 3.3%, indicating ongoing concerns about inflation eroding living standards.
The survey highlighted that while consumers welcomed the decline in gas prices, high prices overall continue to affect their budgets. The sentiment index remains 13% below February 2026 levels and nearly 20% below a year ago. CNBC reported that inflation is now seen as a greater risk than unemployment, with 36% of consumers identifying it as the primary concern.
Looking ahead, the sentiment index's future trajectory will depend on developments in energy prices and the broader economic landscape, particularly in light of ongoing geopolitical tensions.