Consumer sentiment rises for the first time in three months

Consumer Sentiment Rises for the First Time in Three Months

Consumer sentiment rises for the first – For the first time in three months, the University of Michigan’s latest survey indicates a slight uptick in American consumer confidence. The preliminary reading of 48.9, released on Friday, marks a 9% increase from the previous month’s figures, signaling a potential shift after months of economic uncertainty. This rebound comes as global energy prices, which had been climbing sharply following the United States and Israel’s conflict with Iran, begin to stabilize. Gasoline prices, a key factor in shaping public economic perception, have eased in recent weeks, contributing to the improved sentiment.

Gas Prices and the Impact of the Iran War

The war with Iran, which began in February, initially caused a sharp spike in energy costs, sending consumer sentiment into a freefall. Energy prices surged during the several weeks after the conflict escalated, leading to a record low in confidence. Joanne Hsu, the director of the surveys, noted in a statement that the recent easing in gas prices has provided relief to consumers. “This month, consumer sentiment ticked up… with consumers experiencing some relief due to the early-month easing in gasoline prices,” she said. However, the recovery remains fragile, as sustained price drops are necessary for sentiment to fully rebound.

“Lower-income consumers exhibited a particularly strong sentiment increase, consistent with the fact that gasoline comprises a larger share of their budgets.”

While the overall improvement in sentiment is promising, it is still below the levels seen during previous economic crises. The survey highlights that the current reading surpasses the low points recorded during the pandemic, the Great Recession, and even the post-9/11 era. Yet, the increase does not necessarily indicate a long-term recovery. Experts warn that unless energy prices continue to decline, the optimism may not hold.

A Long History of Economic Challenges

Consumer confidence has been in a prolonged slump, driven by a series of economic shocks since 2020. The pandemic triggered a recession, which disrupted the longest economic expansion in U.S. history. Following that, inflation reached a 40-year high in June 2022, pushing sentiment to its lowest level in decades. The Federal Reserve’s rate hikes in 2023 to combat inflation further strained consumer outlook, while a congressional deadlock over the debt ceiling added to the sense of instability.

By 2024, some signs of recovery emerged, but this progress was reversed in 2025 with the introduction of sweeping tariffs under President Donald Trump. These measures heightened fears about affordability, prompting a drop in confidence. The recent Iran war has now compounded these concerns, adding another layer of volatility to an already fragile economic landscape. Despite this, the slight improvement in sentiment suggests that consumers may be beginning to adapt to the ongoing challenges.

Resilience in the Face of Uncertainty

A separate quarterly survey by TransUnion, released earlier this week, supports the idea that consumers are demonstrating resilience. While optimism has not significantly changed from a year ago, the level of pessimism has decreased, according to Charlie Wise, TransUnion’s head of global research and consulting. “We see a lot of resilience in consumers that maybe have gotten a little bit more accustomed to the volatile times that we live in, and a lot of price uncertainty,” Wise explained in an interview with CNN.

Nevertheless, inflation remains the top financial concern for consumers. In the second quarter, 50% of respondents cited inflation as their primary worry, up from 47% in the previous period. This reflects a persistent challenge, as inflation has remained the worst in three years, affecting household budgets and purchasing power. Kevin Warsh, a prominent economist, acknowledged that while some might argue consumers are becoming desensitized to rising prices, the reality is that they are adjusting to a new normal of economic instability.

“A cynic might say they’re getting numb to it, but I think more realistically they’re getting used to the realities that price stability is going to be a little out of normal balance for a continuing amount of time,” Warsh said.

The dramatic increase in inflation during June 2022, which hit 9.1%, served as a turning point. At that time, many Americans were unprepared for such a sharp rise in costs, as it marked the highest inflation rate in four decades. However, the repeated exposure to price fluctuations has helped some consumers develop a sense of adaptability. “Now, when you look at gas prices and energy prices that have increased, I think that consumers may be more likely to say at this point, ‘you know, I lived through this fairly recently and managed to come out OK on the other side; I’ll probably be OK this time too,’” Wise added.

Despite the recent improvement, the University of Michigan’s survey underscores that the recovery is still in its early stages. The report emphasizes that the current level of confidence is still lower than historical norms, particularly compared to the pre-war period in February. For the sentiment to rise above the lowest levels, a sustained period of economic stability with manageable inflation is needed. This could require continued flow of oil through the Strait of Hormuz, a critical chokepoint for global supply, to ensure prices remain at bay.

The broader context of the U.S. economy highlights a pattern of resilience amid repeated shocks. Since the pandemic, Americans have navigated a series of crises, including a recession, inflationary pressures, and political gridlock. These events have created a landscape where consumer confidence has never had a prolonged period to recover. The latest uptick in sentiment, therefore, may be a small but hopeful sign that the market is gradually adapting to these persistent challenges.

As the economy continues to evolve, the balance between stability and volatility remains crucial. While the recent decline in gas prices has provided temporary relief, the long-term trajectory of inflation and affordability will determine whether this confidence is more than a fleeting trend. The data from the University of Michigan and TransUnion surveys together paint a picture of a population that is both enduring and adjusting to the uncertainties of the modern economic climate.