US Consumer Sentiment Rises in June 2025
In June 2025, US consumer sentiment showed improvement for the first time in six months. The University of Michigan shared early data on Friday. This data hints at a steadying economy. Inflation stays low, and trade tensions with China have eased for now.
The University of Michigan’s Consumer Sentiment Index
The university’s well-known Consumer Sentiment Index rose to 60.5 in June. This is up from 52.2 in May. It’s a 16% increase, the biggest jump in a year. This rebound follows five straight months of decline. It brings the index up from its second-lowest point in nearly 75 years. Still, sentiment is down 20% compared to December 2024.
How Consumers Reacted to Economic Changes
Joanne Hsu, the survey’s director, talked to the Associated Press. She said, “Consumers seem to have adjusted to the high tariffs announced in April. They also appear to have adapted to the policy changes that followed. However, consumers still see many risks to the economy.”
How Tariffs and Trade Policies Affect the Economy
The improvement came after President Donald Trump delayed a new round of tariffs. These tariffs were set for imports from about 60 countries in April. Last month, a truce with China was reached. While tariffs are still high, the White House has hinted at pausing further increases during talks.
Consumer Confidence Index
The Conference Board’s Consumer Confidence Index also improved. This separate measure was released late last month. It showed improvement after five straight monthly declines. Experts link this shift to reduced fears over inflation and unpredictable trade policies.
Inflation Data and the Federal Reserve
Earlier this week, official inflation data showed consumer prices rose 2.4% year-on-year in May. This is a slight increase from 2.3% in April. While tariffs may push prices up later this year, inflation is still near the Federal Reserve’s 2% target for now.
Political Differences in Sentiment
Sentiment remains split along political lines. Republicans, who generally support Trump’s economic policies, show stronger confidence than Democrats. Democrats were more optimistic under the Biden administration. However, sentiment improved across all political groups in June, including independents.
Inflation Expectations and Federal Reserve Policy
In June, consumers expected lower inflation. This news is likely welcome for the Federal Reserve ahead of its policy meeting next week. Economists see these expectations as a key factor in inflation trends. Fears of rising prices can affect wage demands and spending habits.
Federal Reserve’s Interest Rate Decision
The Fed is expected to keep its benchmark short-term interest rate unchanged at around 4.3% at its next meeting. Policymakers will watch how trade policy and inflation risks affect the broader economy.
