Looking at consumer sentiment, it jumped up 16% this month. It currently sits at a preliminary 60.5 based on this month’s University of Michigan sentiment survey. Consumer sentiment recently had its first rise since December. This could represent a bright spot while the economy continues to experience uncertainty and turbulence.
Joanne Hsu, the director of the survey, said there had been an increase this month. She attributed it to the relaxing trade tensions that had spiked earlier this year. The turmoil surrounding President Donald Trump’s trade war had contributed to a general pessimism among American consumers and businesses, particularly during his administration’s tariff blitz.
“Consumers appear to have settled somewhat from the shock of the extremely high tariffs announced in April and the policy volatility seen in the weeks that followed,” said Hsu. As one of the highest tariffs imposed during the trade war, these tariffs not only harmed consumers, but introduced widespread uncertainty and fear.
Even with this hopeful change in attitude, that is still about 20% lower than the same time last December. Indeed, this means that although there is room for cautious optimism, consumers are still concerned and struggling with the unknowns. Hsu noted that “consumers still perceive wide-ranging downside risks to the economy.”
The survey suggests that American consumers have learned to cope with the damage caused by these destructive tariffs. These tariffs were first announced back in April. There is an abiding worry that should the world’s trade tensions flare up again, consumer confidence might not hold.
The University of Michigan’s monthly consumer sentiment survey is perhaps the most well-known and trusted measure of consumer sentiment. It’s a mirror of the broader economic malaise. By the spring months, sentiment had cratered to almost all-time lows. This change is indicative of how volatile consumer attitudes are to outside economic influences.
The recent spike in consumer optimism is a good example of an inflection point. Americans should not be fooled into thinking they have already weathered the worst of President Trump’s trade war. At the same time, they are deliberate as they assess the continued threats associated with international trade policy.