The University of Michigan’s preliminary Consumer Sentiment Index rose to 54.4 in July, significantly beating the consensus forecast of 51.0 and climbing from 49.5 in June. This 9.9% month-over-month increase marks the highest reading since February, driven largely by easing gasoline prices and a broad improvement across all five index components, particularly in buying conditions for durable goods.
Inflation expectations showed signs of moderation, with the year-ahead outlook ticking down to 4.2% from 4.6% in June. However, long-run inflation expectations remained unchanged at 3.3%. While morale has improved for two consecutive months, the survey noted that sentiment remains nearly 12% below last year’s levels as households continue to grapple with high prices and recent geopolitical volatility.