The University of Michigan consumer sentiment index rose to 55.2 in July 2026, an 11.5% jump from June’s 49.5, beating the consensus forecast of around 51.0. This represents the highest reading since February 2026, following a record low of 44.8 in May. One-year inflation expectations declined to 4.2% from 4.6% in June, while five-year expectations held steady at 3.3%. The improvement was broad-based across all demographics and was primarily driven by easing gasoline prices. For markets, the downward direction of inflation expectations matters more than the absolute level, though the index remains 10.5% below year-ago levels.
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