Consumer Sentiment Rebounds as Gas Prices Ease — Evening Brief – 06.26.26

Consumer confidence improved for a second straight month in June as easing fuel prices and reduced concerns over geopolitical tensions helped lift Americans’ outlook, although sentiment remains well below levels seen earlier this year, according to the University of Michigan’s latest Survey of Consumers.

The Consumer Sentiment Index was revised slightly higher to 49.5 from the preliminary June reading of 48.9, marking a notable rebound from May’s 44.8. While the gain represents roughly a 10% monthly improvement, consumer confidence remains 13% below its February level before the onset of the Iran conflict and nearly 20% lower than a year ago.

“Consumer sentiment confirmed its early-month reading, rising about 10% above May as gas prices moderated,” said Joanne Hsu, director of the Survey of Consumers. “Expected business conditions over the next five years surged 16% as consumers’ worries over long-term consequences of the Iran conflict appear to be easing.”

Inflation expectations also showed modest improvement. One-year inflation expectations were unchanged from the preliminary estimate at 4.6%, down from 4.8% in May. Longer-term inflation expectations eased further, with the five-year outlook revised to 3.3% from the initial 3.4% estimate and down from 3.9% the previous month.

Consumers expressed greater optimism about future economic conditions even as their assessment of the current environment remained subdued. The expectations index rose to 50.7 from a preliminary reading of 49.3 and 44.1 in May, while the current economic conditions index edged down to 47.7 from the preliminary estimate of 48.4 but improved from 45.8 a month earlier.