Market reactions to the improved sentiment data have been muted, with stock prices largely unaffected and U.S. yields rising.

The increase in sentiment is also linked to a reduction in trade tensions that had peaked in April 2025.

In June 2025, consumer sentiment rose for the first time in six months, reflecting improved economic views among Americans as inflation remains low and trade tensions ease.

Despite this rebound, consumer sentiment is still down 20% from December 2024, following five consecutive months of decline.

The University of Michigan's Index of Consumer Sentiment increased by 16% from May, reaching 60.5, although it remains significantly below the pre-pandemic average of around 100.

This improvement in sentiment is largely attributed to news of potential trade talks aimed at alleviating the impact of high tariffs imposed by President Trump.

While U.S. tariffs remain elevated, they have not significantly worsened inflation, which rose by only 2.4% in May compared to the previous year.

Inflation expectations have dropped to their lowest in three months, indicating reduced fears regarding the impact of tariffs, although they remain higher than in the latter half of 2024.

The sentiment boost was consistent across various demographics, including age, income, wealth, political affiliation, and geographic location.

Consumer confidence remains sharply divided along political lines, with Republicans generally more optimistic under Trump, while Democrats felt more positive under Biden.

The Federal Reserve is expected to maintain its key short-term interest rate at around 4.3% as it evaluates the economic impact of trade policies and inflation risks.

This rebound in consumer sentiment coincided with a reduction in aggressive rhetoric surrounding tariffs, following a 90-day negotiation period indicating progress with China.