Consumer sentiment snapped a three-month stretch of declines with a 10% rise this month as gas prices moderated, according to the University of Michigan Surveys of Consumers.
Increases were seen across income, wealth and political affiliation. Expected business conditions over the next five years surged 16% as consumers' worries over long-term consequences of the Iran conflict appeared to be easing.
Still, the sentiment index remains in unfavorable territory, at 13% below February 2026, prior to the start of the Iran conflict, and nearly 20% below a year ago.
"While consumers certainly welcomed the recent decline in gas prices, the persistence of high prices overall continues to weigh on their budgets," said U-M economist Joanne Hsu, director of the surveys. "Consumers remain quite worried about the prospect of inflation eroding their living standards in the year ahead."
Personal finances improve, still generally negative
Current assessments of personal finances lifted 9% and year-ahead expectations rose 15%, concurrent with the recent relief from softening gas prices.
However, both readings are still well below those seen at the beginning of 2026 as the cost of living remains at the forefront of consumers' minds, Hsu said. For the third straight month, over half of consumers spontaneously mentioned that high prices are weighing down their personal finances.
Soaring stock markets are buoying personal finances, but only for consumers with the largest stock portfolios, Hsu said. About 28% of consumers with the highest tercile of stock holdings mentioned the favorability of asset values for their personal finances, the highest share seen since January 2025.
In contrast, this factor was only cited by 8% of those with the middle tercile of stock holdings and 4% of those with the lowest stock holdings.
Consumers more worried about inflation than unemployment
The surveys asked consumers whether inflation or unemployment posed greater risks to consumers in the year ahead. In recent months, a rising share of consumers identified inflation as the greater potential problem.
At the start of the year, 23% reported that inflation would be the greater challenge, 14% chose unemployment; the remainder said both equally, according to Hsu. This month, however, a substantial 36% now chose inflation-the highest since February 2025-while only 7% reported unemployment.
Consumer Sentiment Index
The Consumer Sentiment Index rose to 49.5 in the June 2026 survey, up from 44.8 in May and below last June's 60.7. The Current Index rose to 47.7, up from 45.8 in May and below last June's 64.8. The Expectations Index rose to 50.7, up from 44.1 in May and below last June's 58.1.
About the surveys
The Surveys of Consumers is a rotating panel survey at the University of Michigan Institute for Social Research. It is based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by web. The minimum monthly change required for significance at the 95% level in the Sentiment Index is 4.8 points; for the Current Economic Conditions Index and Index of Consumer Expectations, the minimum is 6 points.
About ISR
Established in 1949, the Institute for Social Research at the University of Michigan is among the world's oldest social science research organizations and a world leader in the development and application of social science methodology. ISR conducts some of the most widely cited surveys and studies in the nation, including the University of Michigan Surveys of Consumers, American National Election Studies, Monitoring the Future Study, Panel Study of Income Dynamics, Health and Retirement Study, National Survey of Black Americans and World Values Survey. ISR is also home to the Inter-University Consortium for Political and Social Research, which maintains the world's largest computerized social science data archive.
