Consumer sentiment rises for the first time in three months

Consumer Sentiment Surges Amid Easing Gas Prices

Consumer sentiment rises for the first – After a prolonged decline, U.S. consumer sentiment has seen its first uptick in three months, according to the latest report from the University of Michigan. The survey, released on Friday, revealed a 9% increase in sentiment to a preliminary reading of 48.9 in early June. This marks a critical shift from the record lows recorded in February, when the escalating conflict between the United States, Israel, and Iran triggered a sharp rise in global energy costs. The war’s impact on fuel prices, which heavily influence public perception of economic stability, had previously depressed consumer confidence to levels not seen since the post-World War II era.

Gas Prices as a Key Indicator

The recent rebound in sentiment is closely tied to the gradual decline in gasoline prices over the past several weeks. As fuel costs eased, consumers began to feel a renewed sense of economic relief, particularly in the early months of the year. Joanne Hsu, director of the surveys, noted in a statement that the improvement reflects a growing comfort with the current market conditions. “Consumers are starting to see some relief as gasoline prices stabilize, which has helped shift their outlook,” she explained.

“This month, consumer sentiment ticked up… with consumers experiencing some relief due to the early-month easing in gasoline prices,” Joanne Hsu, the surveys’ director, said in a release.

Hsu highlighted that lower-income households, which spend a disproportionately larger share of their budgets on energy, showed the most significant gains in optimism. This suggests that the easing of fuel prices has had a particularly positive effect on those with limited financial flexibility. However, the recovery remains tentative, as many experts caution that sustained improvement will depend on further declines in oil prices.

A Year of Economic Challenges

Consumer sentiment has been in a downward spiral for years, shaped by a series of compounding economic shocks. Since 2020, Americans have navigated a landscape defined by the pandemic, inflationary pressures, and geopolitical tensions. The pandemic recession initially disrupted the economy, ending a record-long expansion period. Then, the post-pandemic surge in prices pushed sentiment to an all-time low in June 2022, with inflation reaching a peak of 9.1%. In 2023, additional strain came from the Federal Reserve’s rate hikes and the political standoff over the debt ceiling, further eroding consumer confidence.

The situation worsened in 2025 when President Donald Trump’s sweeping tariff policies introduced new uncertainty. These measures, coupled with the ongoing war in the Middle East, have left consumers grappling with persistent price instability. Yet, there are signs of adaptation. “Consumers may be developing a tolerance for these fluctuations, which could explain why sentiment hasn’t yet rebounded fully,” said Charlie Wise, TransUnion’s head of global research and consulting.

“We see a lot of resilience in consumers that maybe have gotten a little bit more accustomed to the volatile times that we live in, and a lot of price uncertainty,” Charlie Wise, TransUnion’s head of global research and consulting, said in an interview with CNN.

Wise pointed out that the current level of pessimism, while still high, is less intense than it was in the wake of the pandemic. The recent drop in inflation worries—now at 50% from 47%—indicates that Americans are gradually adjusting to the new economic normal. However, the overall sentiment remains subdued, with inflation still cited as the primary financial concern.

Historical Context of Consumer Anxiety

The University of Michigan’s survey data reveals that the current sentiment levels are the lowest recorded since the early 1980s. This marks a stark contrast to the economic conditions of the past, where periods of inflation or recession were often followed by recovery. Yet, the prolonged nature of recent shocks has prevented a meaningful rebound. Kevin Warsh, an economist, emphasized that the situation is more complex than it appears. “A cynic might say they’re getting numb to it, but I think more realistically they’re getting used to the realities that price stability is going to be a little out of normal balance for a continuing amount of time,” he stated.

Warsh’s remarks align with the observation that consumers are now accustomed to frequent price spikes. For instance, the 2022 inflation surge, which was the highest in four decades, initially caught many off guard. “At the time, people weren’t used to this level of price instability,” Wise noted. “But now, when you look at gas prices and energy costs, they may be more likely to say, ‘I lived through this fairly recently and managed to come out OK on the other side; I’ll probably be OK this time too,’” he added.

The Road to Recovery

While the latest survey signals a potential turning point, the path to sustained optimism remains uncertain. Experts argue that for sentiment to truly recover, the economy must experience prolonged stability. This would likely require oil prices to continue declining, with a key factor being the unimpeded flow of oil through the Strait of Hormuz. The strait, which serves as a critical bottleneck for one-fifth of the world’s oil supply, has been a focal point of global markets, influencing both price trends and consumer behavior.

The TransUnion quarterly survey, released earlier this week, echoed similar sentiments. Although optimism has not significantly improved since last year, the level of pessimism has decreased, suggesting a gradual shift in consumer attitudes. “There’s a noticeable resilience in people who’ve weathered multiple economic disruptions,” Wise explained. “They’re starting to see the patterns and realize that while prices fluctuate, they can still adapt.”

Despite these signs of adjustment, the broader economic environment remains challenging. Inflation, now the worst in three years, continues to weigh on households, with the cost of living reaching unprecedented levels. The question now is whether the current recovery is a temporary rebound or the beginning of a longer-term stabilization. For now, the data suggests that while the tide is turning, the battle for consumer confidence is far from over.

As the U.S. economy moves forward, the interplay between energy prices, inflation, and geopolitical events will likely shape consumer sentiment for the foreseeable future. The recent uptick in optimism provides a glimmer of hope, but it remains to be seen whether this momentum will translate into lasting economic confidence. With the global landscape still volatile and the domestic economy grappling with affordability issues, the road to recovery will require more than just a dip in gas prices—it will demand consistent stability across all fronts.