US consumer sentiment improved in June for the first time in six months, according to preliminary data released Friday by the University of Michigan, offering signs of economic stabilization as inflation remains subdued and trade tensions with China temporarily ease.The university’s closely watched Consumer Sentiment Index jumped to 60.5 in June from 52.2 in May — a 16% rise that marks the sharpest increase in a year. The rebound follows five consecutive monthly declines and lifts the index from its second-lowest level in the survey’s nearly 75-year history. Despite the uptick, sentiment remains down 20% compared with December 2024.“Consumers appear to have settled somewhat from the shock of the extremely high tariffs announced in April and the policy volatility seen in the weeks that followed,” said Joanne Hsu, director of the survey, AP reported. “However, consumers still perceive wide-ranging downside risks to the economy.”The improvement comes after President Donald Trump postponed a sweeping round of tariffs on imports from roughly 60 countries in April and subsequently reached a truce with China last month. While tariffs remain elevated by historical standards, the White House has signaled a willingness to pause escalation pending further talks.The Conference Board’s Consumer Confidence Index — a separate metric released late last month — also showed improvement after five straight monthly declines, with analysts attributing the shift to easing fears over inflation and trade policy unpredictability.Official inflation data released earlier this week showed consumer prices rising 2.4% year-on-year in May, up slightly from 2.3% in April. While tariffs are expected to put further pressure on prices in the second half of the year, inflation remains close to the Federal Reserve’s 2% target for now.Sentiment remains sharply divided along political lines. Republicans, who broadly support Trump’s economic policies, continue to express stronger confidence than Democrats, whose views had been more optimistic under the Biden administration. However, sentiment improved across party lines in June, including among independents.Inflation expectations among consumers also declined in June — a development likely to be welcomed by the Federal Reserve ahead of its policy meeting next week. Economists view such expectations as a key variable in inflation dynamics, as fears of rising prices can influence wage demands and spending behavior.The Fed is widely expected to leave its benchmark short-term interest rate unchanged at approximately 4.3% when it meets next week, as policymakers monitor the evolving impact of trade policy and inflationary risks on the broader economy.
