U.S. Consumer Sentiment Rebounds in June Amid Easing Inflation Expectations — Evening Brief – 06.13.25 

Consumer sentiment climbed to 60.5 in June, according to preliminary data from the University of Michigan, marking its first monthly improvement in six months and a significant rebound from May’s 52.2 reading. The result surpassed economists’ expectations for 53.5 and reflected a degree of stabilization following heightened volatility stemming from aggressive trade policies earlier this year. 

One of the most notable developments was a sharp decline in one-year inflation expectations, which fell to 5.1% from 6.6%, while five-year expectations eased slightly to 4.1% from 4.2%. Both metrics represent the lowest inflation expectations in three months, suggesting that consumers are beginning to adjust to the new economic landscape shaped by the April tariff announcements. 

Despite the improvement, the headline sentiment index remains roughly 20% below December 2024 levels, when consumer confidence temporarily spiked following the presidential election. “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 University of Michigan’s Surveys of Consumers. However, she cautioned that consumers continue to perceive “wide-ranging downside risks to the economy,” with outlooks on business conditions, personal finances, durable goods purchases, labor markets, and equities all still tracking below their December readings. 

Supporting the broader recovery in sentiment, the current conditions sub-index rose to 63.7, beating both May’s 58.9 and the consensus forecast of 59.4. Meanwhile, the consumer expectations component surged to 58.4—up from 47.9 last month and significantly higher than the 49.0 forecasted by economists. 

While long-run inflation expectations have declined for two consecutive months, Hsu emphasized that both near- and long-term readings remain elevated compared to the second half of 2024. “This reflects widespread beliefs that trade policy may still contribute to an increase in inflation in the year ahead,” she noted. 

The data indicates that while consumer fears have moderated in the face of policy shifts, confidence remains fragile and subject to further macroeconomic developments—particularly in relation to trade, inflation, and labor market dynamics.