Consumer sentiment edges up in July but worries about tariffs, economy persist
Consumer sentiment improved in July for the second time in six months.
The University of Michigan’s Consumer Sentiment Index edged up 1.6% to 61.7 in July, up from 60.7 in June. It is down 7.1% year over year.
With regard to current economic conditions, the rose 4.9% to 68.0, up from 64.8 in June. It was the highest reading since February 2025. The improvement was particularly strong among consumers who hold stocks, consistent with continued strength in equity markets, according to economist Joanne Hsu, director of the University of Michigan's Survey of Consumers, while consumers without stock holdings posted a decline in sentiment.
Looking ahead, the expectations Index inched down to 57.7 in July from 58.1 in June. It is down 16.10% year over year.
Although consumers have lifted from the trough in sentiment seen in April, they still perceive ongoing risks to multiple parts of the economy, noted Hsu, with substantial uncertainty remaining on where tariffs will ultimately land with major trading partners.
“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,” she said.
Tariffs
Consumer views continue to be shaped by tariffs. 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.
[READ MORE: Study: Nearly 75% of U.S. retail businesses have already lost profit due to tariffs]
Labor Market
Labor market expectations improved a bit, 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.
“Further, 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,” she said.
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.
