Consumer Sentiment Jumped 10% in July Before Gas Price Hikes

• The Index of Consumer Sentiment hit 54.4 in July, the highest reading since February's 56.6, with gains seen across all demographic groups, especially among consumers without bachelor's degrees
• Gas prices rose 10 cents to $3.94 per gallon nationally after the survey period, following months in the $4 range from April through most of June
• Sentiment had reached historic lows of 44.8 in May 2026, the lowest in the index's 73-year history, driven by elevated fuel costs before the recent improvement

Summary: Consumer Sentiment Jumped 10% in July Before Gas Price Hikes

Key Findings:

Consumer sentiment surged 10% in early July 2026, reaching an Index of Consumer Sentiment reading of 54.4—the highest since February's 56.6. This marks the second consecutive month of 10% gains, according to preliminary results from the University of Michigan's Surveys of Consumers.

Primary Drivers:

The improvement was primarily attributed to easing gas prices in recent weeks. Surveys of Consumers Director Joanne Hsu noted the sentiment increase was widespread across demographics, with particularly strong gains among consumers without bachelor's degrees. However, sentiment remains 12% lower than year-ago levels due to persistently high prices overall.

Critical Timing:

Importantly, 70% of interviews (conducted June 23-July 13) were completed before gas prices rose again following resumed U.S. strikes against Iran. The national average for regular gasoline subsequently increased by 10 cents to $3.94 per gallon, though still below the $4+ range seen through April, May, and most of June.

Context:

This represents a significant recovery from May's historic low of 44.8—the lowest reading in the index's 73-year history. The Conference Board's separate consumer confidence measure also increased by 0.6 points in June, corroborating the positive trend.

Market Implications:

While confidence is improving, PYMNTS research indicates varied consumer behavior: some maintain spending capacity, others are stretching budgets, and some are rapidly depleting financial cushions. The recent gas price uptick following geopolitical tensions could threaten this fragile recovery in consumer sentiment.