Consumer sentiment advanced for the second time in half a year, rising by less than 2% from the previous month, as reported by the University of Michigan Surveys of Consumers.
It currently stands approximately 17% lower than in December 2024, when sentiment saw a bump post-election. The current conditions jumped around 5% to reach its highest level since February 2025, while the expectations index experienced a slight decline.
This month’s rise was notably robust among stockholders, in line with the ongoing strength in equity markets, whereas those without stock investments experienced a drop in sentiment, noted economist Joanne Hsu, who directs the surveys.
Overall, consumers have recovered from the low sentiment recorded in April but still perceive persistent risks across various aspects of the economy, she stated.
“While consumers might appreciate any indication of strengthening trade policy, recent announcements include tariffs significantly higher than what has been seen in recent times,” Hsu remarked. “Moreover, considerable uncertainty persists regarding the final tariff levels with major trading partners like China. Currently, consumers are not convinced that the threats of rising inflation or declining business conditions have faded, even if they no longer anticipate a dire worst-case scenario.”
Consumer perspectives remain influenced by tariffs
A considerable majority, approximately 57% of consumers, voluntarily shared thoughts on tariffs, a decrease for two consecutive months from a high of two-thirds in May.
These consumers generally concur that trade policy is likely to impact inflation trends, business climates, and personal finances, despite some believing the economy could ultimately gain in the long term, Hsu mentioned.
Even though tariff policy appears to be stabilizing below the figures first announced in April, the newly introduced tariffs have been quite elevated from a historical viewpoint. Concerns about tariffs are notably strong among higher-income and college-educated consumers, as well as those with substantial stock holdings.
These consumers acknowledge that their personal finances have benefited from robust stock markets; however, their personal outlook on the economy remains relatively bleak. Currently, the interviews reveal little indication that other policy changes, such as the recent enactment of the tax and spending bill, have significantly influenced consumer sentiment, Hsu noted.
Ongoing perceived risks for business environments and labor markets
Expectations surrounding the labor market showed a marginal improvement but are still significantly weaker than they were a year ago. Approximately 57% of consumers predict an increase in unemployment over the next year, down from two-thirds noted in April when major tariffs were revealed, but still considerably higher than the 35% recorded a year ago.
According to Hsu, the current figures are comparable to those during the Great Recession. Additionally, consumers expect to feel the effects of any downturn in the labor markets; they foresee weak income growth alongside a heightened risk of job loss.
Consumer Sentiment Index
The Index of Consumer Sentiment climbed to 61.7 in the July 2025 survey, an increase from 60.7 in June and below July’s previous year’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 decreased to 57.7, down from 58.1 in June and below last July’s 68.8.
About the surveys
The Surveys of Consumers represent a rotating panel survey conducted at the University of Michigan Institute for Social Research. This survey is based on a nationally representative sample, providing each household in the continental U.S. an equal chance of selection. Interviews are conducted online throughout the month. The minimum monthly change needed 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.