US consumer sentiment rose this month amid more-favorable personal finances, while tariffs weighed on Americans’ optimism for the economy and helped boost inflation expectations to a three-year high, according to a University of Michigan report Friday.
The report showed a divergence in sentiment about the present and the future, with a near-record number of households mentioning recent income gains and contrasting with a pickup in inflation expectations, reports Bloomberg. The economic outlook was “much more negative” among respondents who unfavorably mentioned the new tariffs, as the Trump administration imposed tariffs on metals imports from allies and prepared for levies on $50 billion of Chinese imports.
Even so, sentiment remains high for this expansion, as a tight labor market and historically low unemployment levels continue to buoy the US economy. That should help drive continued gains in consumer spending, the biggest part of the US economy. Respondents anticipated an annual gain of 2.5% in household incomes, the highest since 2008 and up from 1.6% in May, the report showed. Almost all of the June gain came from people in the bottom two-thirds of incomes, reflecting job gains across the population.
