Consumer Sentiment Inches Up in July

Consumer sentiment inched up in July, increasing for a second straight month. The Michigan Consumer Sentiment Index was up 1.8% (1.1 points) to 61.8 this month. This is the index's highest level since February but still reflects historically low levels of optimism. Consumer sentiment has fallen by 6.9% (4.6 points) compared to a year ago.

The Michigan Consumer Sentiment Index is a monthly survey of consumer confidence levels in the U.S. with regards to the economy, personal finances, business conditions, and buying conditions, conducted by the University of Michigan. There are two reports released each month; a preliminary report released mid-month and a final report released at the end of the month.

Joanne Hsu, the director of surveys, made the following comments:

Consumer sentiment was little changed from June, inching up about one index point to 61.8. While sentiment reached its highest value in five months, it remains a substantial 16% below December 2024 and is well below its historical average. Short-run business conditions improved about 8%, whereas expected personal finances fell back about 4%. Consumers are unlikely to regain their confidence in the economy unless they feel assured that inflation is unlikely to worsen, for example if trade policy stabilizes for the foreseeable future. At this time, the interviews reveal little evidence that other policy developments, including the recent passage of the tax and spending bill, moved the needle much on consumer sentiment.