Consumer sentiment rises for the first time in three months

Key Points:

• Consumer sentiment in the U.S. rose 9% to a preliminary reading of 48.9 in early June, marking the first increase since February following declines caused by wartime price spikes and surging gas prices.
• The improvement in sentiment is largely attributed to recent declines in gas prices, which have eased financial pressure, especially for lower-income consumers for whom gasoline takes up a larger share of their budget.
• Despite the recent uptick, sentiment remains at historically low levels, lower than during past crises such as foreign wars, 9/11, the Great Recession, and the pandemic, largely due to compounded price shocks and affordability challenges.
• The ongoing instability in global energy markets, particularly related to the Strait of Hormuz, means consumer sentiment is unlikely to significantly improve unless gas prices continue to fall and the economy stabilizes with low inflation.
• Surveys indicate consumers are showing resilience and adapting to ongoing price volatility and inflation, with many becoming accustomed to economic uncertainty rather than overly pessimistic.