The University of Michigan's Consumer Sentiment Index rose to 48.9 in June, up from an all-time low of 44.8 in May. The reading cleared the 46.0 economists had forecast.

Falling gasoline prices drove the rebound. The national average declined to $4.11 per gallon this week, per AAA. Prices peaked at $4.56 on May 21, the highest level in four years, per AAA.

The improvement snapped three consecutive months of declining sentiment tied to the outbreak of the US-Iran war.

Lower-income households led the gain, a pattern Joanne Hsu, the survey's director, connected to gasoline comprising a disproportionately large share of their spending.

Despite the bounce, current gas prices remain $1.12 higher than they stood before the Iran war began, per the same ABC News report.

Prices at the pump are also well above the $3.13 per gallon recorded a year ago, per the same Wall Street Journal report.

Inflation Keeps the Recovery Fragile

Consumer inflation exceeded 4% in May for the first time in three years, per the same Reuters report. Household concerns about purchasing power remain firmly in place.

One-year inflation expectations slipped to 4.6% in June from 4.8% in May, per the same Reuters report. Five-year expectations fell to 3.4% from 3.9%, per the same Reuters report.

"There is still a cost-of-living crisis," FWDBONDS chief economist Christopher Rupkey said. Goods prices show no sign of reversing.

LPL Financial chief economist Jeffrey Roach said inflation pressures should ease if the Iran conflict resolves, per the same Reuters report. He warned a prolonged war could intensify price headwinds through the summer.

With inflation elevated, rate-cut hopes have given way to expectations of policy tightening, per the same Reuters report. The Federal Reserve is widely expected to hold its benchmark rate in the 3.50% to 3.75% range at its meeting next week.

The labor market has provided ballast, with three straight months of above-expectations job growth and a stable unemployment rate, per the same Reuters report.

Consumer spending accounts for roughly two-thirds of US economic activity, per the same ABC News report. Spending slowed in the first quarter of 2026.

Gross domestic product (GDP) expanded at a 2% annualized rate in early 2026, per the same report. The broader economy was still holding even as consumer confidence eroded.

Sentiment gains were broad-based, spanning all age groups, education levels, and political affiliations, according to the University of Michigan survey.

A final June reading will be published later this month, based on additional interviews, per The Wall Street Journal.