Consumer sentiment rose slightly in July, with current conditions improving and inflation expectations falling. The overall outlooks remain cautious.

WASHINGTON — Consumer sentiment improved for the second straight month, inching up a scant single index point from June. Current conditions rose about 5% to its highest reading since February 2025, while the expectations index fell slightly.

A rise in sentiment among stockholders was partially offset by a decline among consumers who do not own stocks. Perceptions of this month’s economic developments were similar across the political spectrum; Republicans, Independents and Democrats all saw some minor increases in sentiment this month. Although recent trends show sentiment moving in a favorable direction, sentiment remains broadly negative. Consumers are hardly optimistic about the trajectory of the economy, even as their worries have softened since April 2025.

Year-ahead inflation expectations fell for a second straight month, plunging from 5.0% last month to 4.5% this month. This is the lowest reading since February 2025 but above December 2024 just after the election. Long-run inflation expectations receded for the third consecutive month, falling back from 4.0% in June to 3.4% in July. This is the lowest reading since January 2025 but, again, still considerably higher than the December 2024 reading.

Source: University of Michigan, Surveys of Consumers

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