Consumer sentiment improved for the second time in six months, inching up less than 2% from last month, according to the University of Michigan Surveys of Consumers.
It remains about 17% below December 2024, when sentiment had exhibited a post-election bump. Current conditions rose about 5% to its highest reading since February 2025, while the expectations index fell slightly.
This month's improvement was particularly strong among consumers who hold stocks, consistent with continued strength in equity markets, whereas consumers without stock holdings posted a decline in sentiment, said economist Joanne Hsu, director of the surveys.
Overall, consumers have lifted from the trough in sentiment seen in April but still perceive ongoing risks to multiple dimensions of the economy, she said.
"While consumers may welcome any sign that trade policy is firming, recent announcements have included tariffs that are far higher than seen in recent memory," Hsu said. "Furthermore, substantial uncertainty remains on where tariffs will ultimately land with major trading partners like China. At this time, consumers are unconvinced that the prospect of higher inflation or a deterioration in business conditions has passed, even if they are no longer bracing for a catastrophic worst-case scenario."
Consumer views continue to be shaped by tariffs
A solid majority of about 57% of consumers spontaneously offered comments about tariffs, down for two straight months from a high of two-thirds in May.
These consumers are broadly in agreement that trade policy is likely to threaten the trajectory of inflation, business conditions and personal finances, even if some consumers may believe that the economy could benefit in the long run, Hsu said.
Although tariff policy appears to be stabilizing below the levels initially announced in April, recently announced tariffs have been very high from a historical perspective. Tariff concerns are particularly strong among higher-income and college-educated consumers, as well as consumers with large stock holdings.
These consumers note that their personal finances have been boosted by strong stock markets, however their personal views of the economy are still relatively gloomy. At this time, the interviews reveal little evidence that other policy developments, including the recent passage of the tax and spending bill, moved the needle much on consumer sentiment, Hsu said.
Continued risks perceived for business conditions and labor markets
Labor market expectations improved just a touch but remain considerably weaker than a year ago. About 57% of consumers expect unemployment to rise in the year ahead, down from the two-thirds seen in April when massive tariffs were announced, but well above the 35% seen a year ago.
According to Hsu, current readings are comparable to readings last seen in the Great Recession. Furthermore, consumers expect to be personally impacted by any deterioration in labor markets; they anticipate very weak income growth as well as elevated risk of job loss.
Consumer Sentiment Index
The Index of Consumer Sentiment rose to 61.7 in the July 2025 survey, up from 60.7 in June and below last July's 66.4. The Current Economic Conditions Index rose to 68.0, up from 64.8 in June and above last July's 62.7. The Index of Consumer Expectations fell to 57.7, down from 58.1 in June and below last July's 68.8.
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 Index of Consumer Sentiment is 4.8 points; for the Current Economic Conditions Index and Index of Consumer Expectations, the minimum is 6 points.
