U.S. consumer sentiment remains low despite improvement in June

WASHINGTON, June 26 (Xinhua) -- U.S. consumer sentiment improved in June, but remains in unfavorable territory, a survey has shown.

The widely watched consumer sentiment index for June confirmed its early-month reading, rising about 10 percent above May as gas prices moderated, according to the poll released Friday by the University of Michigan.

Increases were seen across income, wealth and political affiliation. "I expect consumer sentiment to continue improving in the months ahead. I think sustained 'normal' oil prices are the biggest factor," Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, told Xinhua.

Still, sentiment remains in unfavorable territory at 13 percent below the February 2026 reading prior to the start of the Iran conflict and nearly 20 percent less than a year ago.

For the third straight month, over half of consumers spontaneously mentioned that high prices are weighing down their personal finances.

Some economists note that June's survey is about prices at the pump.

"The rise (in consumer sentiment) in June is overwhelmingly a story of gas prices," Dean Baker, co-founder of the Center for Economic and Policy Research, told Xinhua. "They have fallen sharply in the last month, which explains the improvement."

Indeed, the cost of living "remains at the forefront of consumers' minds," the survey said.

This comes at a time of historically high inflation in the United States that began during the previous administration due to what many economists said was profligate government spending.

The cost of buying a home -- the No. 1 life investment for a large share of the U.S. population -- has also skyrocketed since the COVID era.

Soaring home prices and high mortgage rates have severely damaged Americans' economic optimism, with the vast majority viewing the traditional middle-class lifestyle as increasingly unattainable.

This crisis has shifted economic views in three primary ways: widespread pessimism about wealth-building, a "lock-in" effect that hurts mobility, and an overall prioritization of basic living cost, according to the Center for American Progress.

Meanwhile, year-ahead inflation expectations inched down from 4.8 percent in May to a still-elevated 4.6 percent this month, the survey found.

The current reading substantially exceeds the 3.4 percent recorded in February before the Iran conflict began, as well as all 2024 readings, according to the report.

Long-run inflation expectations fell back from 3.9 percent last month to 3.3 percent in June, remaining a bit higher than the 2.8 percent to 3.2 percent range seen in 2024, according to the survey.