Key takeout
Professional forecasters also cut previous estimates on how much damage Trump’s tariffs will cause to the economy.
American consumers remain pessimistic by historical standards, but people aren’t too worried about President Donald Trump’s tariff campaign pushing prices up.
The University of Michigan’s Consumer Sensation Index, a survey of how people feel about the economy and their finances, rose in June for the first time in six months, the university said Friday.
According to a preliminary survey, the index rose 16% in June compared to May, but was 20% below the December 2024 level.
Feelings about most aspects of the economy, including inflation, have improved amid news about trade talks that could eliminate the high tariffs Trump has imposed in recent months. Economists look closely at measures of how people feel about the economy, as sentiment can affect how willing people use it. Consumer expenditure is the basis of the economy, accounting for around 68% of GDP.
Heather Long, chief economist for the Navy Federal Credit Union, wrote by Heather Long, who wrote in the commentary. “Americans are relieved to see President Trump blocking his trade war and tariffs, but they remain on high alert about price increases at stores and gas pumps.”
The decline in consumer pessimism reflects the pessimism of professional economists who have reduced forecasts about the amount of damage Trump’s tariffs will cause the economy. The Oxford Economics economist reduced the predicted chances of a recession the following year to 35% on Thursday, exceeding the baseline 15% chance of a recession in a given year.
Formal measurements of inflation are milder than expected, and the job market remains resilient. Still, forecasters are brave enough to pass import tax costs to their customers as tariffs reduce jobs and boost inflation later in the year.
