US consumer sentiment edged up in early June for the first time in four months, driven by a decrease in gasoline prices, offering some relief to Americans struggling with inflation. The University of Michigan's preliminary sentiment index increased to 48.9 in June, up from a record low of 44.8 in May. This reading surpassed the expectations of most economists surveyed by Bloomberg, yet it remains the second-lowest figure in data compiled since the 1970s.
The improvement was broad-based, seen across various demographics including age, education, and political affiliation, with lower-income consumers showing a particularly strong increase as gasoline costs constitute a larger portion of their budgets. Despite this monthly gain, consumer sentiment remains considerably weaker compared to previous periods, sitting 13% below the February 2026 reading before the Iran conflict began and nearly 20% lower than a year ago.
Consumers continue to grapple with high living costs, with over half spontaneously mentioning that high prices are negatively impacting their personal finances for the third consecutive month. Year-ahead inflation expectations slightly decreased from 4.8% in May to 4.6% in June but are still significantly elevated compared to the 3.4% seen in February before the Iran conflict. Long-run inflation expectations also fell to 3.3% from 3.9% last month, though they remain above the 2.8% to 3.2% range observed throughout 2024.
