Consumer Sentiment Jumped 10% in July Before Gas Price Hikes

Consumer sentiment improved by 10% in early July, marking the second consecutive month of 10% jumps, according to preliminary results for the month from the University of Michigan’s Surveys of Consumers.

The Index of Consumer Sentiment was gauged at 54.4, the highest reading since February’s 56.6.

July’s improvement was driven by “easing price pressures at the pump in recent weeks,” Surveys of Consumers Director Joanne Hsu said in a press release.

“This month’s rise in sentiment was pervasive across the population, seen across groups by age, income, wealth and political party,” Hsu said in the release. “Particularly strong increases were seen among consumers without a bachelor’s degree.”

Consumer sentiment remains 12% lower than the year-ago figure, though, due to prices remaining high.

Interviews for July’s preliminary results spanned June 23 to July 13, and 70% were completed before gas prices rose again when the United States resumed strikes against Iran, per the report.

The most recent results represent a turnaround from earlier this year, when high gas prices drove consumer sentiment to a new low of 44.8 in May, down from the previous low of 49.8 in April. The figures marked the lowest levels recorded in the over 73-year history of the Index of Consumer Sentiment.

Consumer sentiment then ticked up in early June as gas prices eased.

AAA reported Thursday (July 16) that the price of gas inched higher over the previous week. The national average for a gallon of regular gasoline increased by 10 cents to $3.94, although it remained below the $4 range it was in through April, May and most of June.

The Conference Board’s most recent Consumer Confidence Index, which was released June 30, found that consumer confidence increased by 0.6 points in June.

“Consumer confidence inched up in June as falling oil prices in recent weeks provided some relief to consumer inflation fears,” The Conference Board Chief Economist Dana M. Peterson said in a June 30 press release.

The PYMNTS Intelligence report “The Three-Speed Consumer Economy: How Financial Capacity Is Rewriting Spending Behavior,” the June installment of the PYMNTS Consumer Expectations Index, found that falling confidence hasn’t stopped spending because some consumers still have room to spend, some are stretching every dollar, and some are losing financial cushion fast.