Consumer Sentiment Improves in June as Gasoline Prices Moderate

By Jessica Coacci

Consumer sentiment improved from recent record lows in June as gasoline prices moderated, according to the University of Michigan's monthly survey.

The Michigan consumer-sentiment index rose to 49.5, its final reading for June, after May's reading of 44.8. Economists polled by The Wall Street Journal had been expecting a reading of 49.

Expected business conditions over the next five years surged 16% as consumers' worries over long-term consequences of the Iran conflict appear to be easing, said Joanne Hsu, the survey's director. Still, sentiment remains in unfavorable territory at 13% below the February 2026 reading prior to the start of the Iran conflict, Hsu added.

Consumer sentiment has been crawling off its all-time lows, as news of a ceasefire agreement and a retreat in gasoline prices lift households' spirits. Thursday's personal-consumption expenditures price index showed that inflation rose 4.1% over the year last month, some economists forecast that it could have been the peak of the inflation surge tied to the Iran conflict.

Meanwhile, long-run inflation expectations fell back to 3.3% in June from 3.9% last month, the survey said. Economists and Federal Reserve officials watch long-run inflation expectation measures to ensure price pressures don't become a self-fulfilling prophecy. Outside the survey, other market-based measures of inflation expectations have shown readings remain well anchored.

Despite sentiment worsening in recent months, consumer spending has held up relatively well. Higher personal spending growth and strong retail sales in May suggest consumers proved resilient when facing higher prices. Some economists attribute recent spending to a K-shaped economy, as higher-income consumers drive spending while other households rely on savings and credit to supplement income.

"The cost of living remains at the forefront of consumers' minds; for the third straight month, over half of consumers spontaneously mentioned that high prices are weighing down their personal finances," Hsu said.

Write to Jessica Coacci at jessica.coacci@wsj.com

(END) Dow Jones Newswires

June 26, 2026 10:37 ET (14:37 GMT)