Consumer sentiment rises for 1st time this year as inflation remains
tame
[June 14, 2025] By
CHRISTOPHER RUGABER
WASHINGTON (AP) — Consumer sentiment increased in June for the first
time in six months, the latest sign that Americans’ views of the economy
have improved as inflation has stayed tame and the Trump administration
has reached a truce in its trade fight with China.
The preliminary reading of the University of Michigan’s closely watched
consumer sentiment index, released Friday, jumped 16% from 52.2 to 60.5.
The large increase followed steady drops that left the preliminary
number last month at the second-lowest level in the nearly 75-year
history of the survey. Consumer sentiment is still down 20% compared
with December 2024.
“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,” Joanne Hsu, director of the survey, said in
a written statement. “However, consumers still perceive wide-ranging
downside risks to the economy.”
Americans have largely taken a darker view of the economy’s future after
President Donald Trump unleashed a wide-ranging trade war, imposing
steep tariffs on China, the European Union, and dozens of other
countries. Yet in April Trump postponed a set of sweeping tariffs on
about 60 nations and last month reached a temporary truce with China,
after both sides had sharply ratcheted up tariffs on each other.
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 The Conference Board's consumer
confidence index, released in late May, also increased after five
straight declines that were linked to anxiety over tariffs.
U.S. duties remain elevated compared with historical levels, but so
far they have not worsened overall inflation. Prices rose just 2.4%
in May compared with a year ago, up slightly from 2.3% in April.
Still, most economists expect tariffs to hit harder in the coming
months.
Consumer confidence is sharply divided by political outlook, with
Republicans feeling much better about the economy under Trump than
Democrats. Democratic sentiment about the economy was much higher
under Biden, while Republican views were low. This month, however,
sentiment did improve among supporters of both parties and
independents.
Consumers' inflation expectations — basically a measure of how
worried people are about future inflation — dropped this month,
which will be welcomed by the inflation-fighters at the Federal
Reserve. Inflation expectations can become self-fulfilling, because
if people worry price increases will get worse, they can take steps
— such as demanding higher pay — that push prices even higher.
The Fed meets next week, and is expected to keep its key short-term
interest rate unchanged at about 4.3%.
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