In early June, consumers showed a more positive outlook on the economy and inflation due to progress in the global trade war, according to a University of Michigan survey. The Surveys of Consumers revealed significant rebounds from previous pessimistic readings, with a notable decrease in near-term inflation expectations.

The headline index for consumer sentiment was at 60.5, surpassing the Dow Jones estimate of 54 by a significant margin. This marked a 15.9% increase from the previous month. Both the current conditions index and future expectations measure also saw substantial gains of 8.1% and 21.9%, respectively.

These improvements coincided with a reduction in the aggressive rhetoric around President Trump's tariffs. Following the announcement of a 90-day negotiation period, tensions eased, especially with China, the US's top trade rival.

Survey director Joanne Hsu noted that consumers seem to have adjusted to the shock of high tariffs and policy uncertainty from April. However, concerns about the economy's downside risks persist.

Despite the positive sentiment, all indexes remained below their levels from a year ago, reflecting ongoing worries about the tariff impact on prices and other geopolitical issues. Inflation expectations for both the one-year and five-year outlooks decreased slightly, but still remained elevated compared to the second half of 2024.

The University of Michigan survey's findings contrasted with other indicators, such as the Federal Reserve of New York's report of a drop in the one-year inflation outlook for May. While recent inflation data showed minimal increases, economists anticipate the tariffs to influence prices in the future.

Soft inflation figures have prompted calls from President Trump and White House officials for the Fed to lower interest rates again. However, the central bank is not expected to make any rate cuts until September, despite pressure to act sooner.