Summary
- Consumer sentiment rose for the first time in three months as gas prices eased, according to new data.
- But sentiment remains at historically low levels after years of economic shocks, the latest University of Michigan survey shows.
- Experts say Americans may be adapting to ongoing price volatility following recent inflation and the Iran war.
AI-generated summary was reviewed by a CNN editor.
Washington —
Consumer sentiment may finally be recovering after falling to historic lows due to wartime price spikes.
The University of Michigan’s latest survey of Americans, released Friday, showed that sentiment rose 9% to a preliminary reading of 48.9 early this month, the first increase since February, before the United States and Israel’s destabilizing war with Iran sent global energy prices surging.
Gas prices, which heavily influence people’s perception of the economy, climbed in the several weeks after the war began, pushing sentiment down to a record low — twice. Gas prices have declined in recent weeks, which helped sentiment recover.
“This month, consumer sentiment ticked up… with consumers experiencing some relief due to the early-month easing in gasoline prices,” Joanne Hsu, the surveys’ director, said in a release. “Lower-income consumers exhibited a particularly strong sentiment increase, consistent with the fact that gasoline comprises a larger share of their budgets.”
Sentiment is finally up from a level lower than anything seen during foreign wars, 9/11, the Great Recession, the pandemic, and any prior bouts of high inflation in the post-World War II era. But sentiment will likely remain in the dumps unless gas prices continue to fall meaningfully, likely requiring oil tankers to flow freely again through the Strait of Hormuz, a key chokepoint through which one-fifth of the world’s oil passes.
Sentiment is going through a years-long rough patch for a number of reasons, but it’s mainly due to the price shocks of recent years compounding to worsen affordability, though there are signs consumers may be getting used to it.
Since 2020, Americans have endured several, back-to-back, historic events affecting the economy. That means there really hasn’t been a long and sustained period of rising sentiment to recover from the economic shocks of recent years.
It started with the pandemic recession, which knocked sentiment down after Americans experienced the longest economic expansion on record at the time. Then, post-pandemic inflation reared its ugly head, prompting sentiment to fall to a record low in June 2022.
In 2023, continued rate hikes from the Federal Reserve to tame inflation and a standoff in Congress over the debt ceiling weighed on sentiment again. There was a steady recovery in 2024, but all of that progress was undone in 2025 when President Donald Trump announced sweeping tariffs, making consumers fret and, in turn, pushing down sentiment yet again.
The Iran war is serving as yet another shock, largely due to its effect on gas prices. For sentiment to finally move above historically low levels, it would require a long period of the economy being stable, with low inflation.
A separate quarterly survey from TransUnion released earlier this week showed that consumers’ optimism hadn’t wavered much from a year ago, when Trump announced his sweeping “Liberation Day” tariffs last April. However, the level of pessimism dropped, noted Charlie Wise, TransUnion’s head of global research and consulting.
“We see a lot of resilience in consumers that maybe have gotten a little bit more accustomed to the volatile times that we live in, and a lot of price uncertainty,” he said in an interview with CNN.
Inflation remained the top financial concern for consumers in the second quarter, rising to 50% from 47%, according to the credit bureau’s latest Consumer Pulse Survey.
“A cynic might say they’re getting numb to it, but I think more realistically they’re getting used to the realities that price stability is going to be a little out of normal balance for a continuing amount of time,” he said.
When inflation hit 9.1% in June 2022, many consumers weren’t used to that level of price instability, Wise said. After all, it was the highest inflation seen in four decades.
“So now, when you look at gas prices and energy prices that have increased, I think that consumers may be more likely to say at this point, ‘you know, I lived through this fairly recently and managed to come out OK on the other side; I’ll probably be OK this time too.’”
