Americans are beginning to feel better about the economy, as prices at the pump fall amid optimism over easing tensions between the United States and Iran.
Consumer sentiment ticked up from last month, according to a long-running survey conducted by the University of Michigan, reversing a downward slide that began in February, when the United States and Israel launched strikes against Iran.
“Increases were seen across income, wealth and political affiliation,” Joanne Hsu, director and chief economist of the survey, noted in the survey. She added that consumers’ worries over long-term consequences of the conflict on Iran appeared to be easing.
Gas prices have ticked lower since the United States and Iran signed a memorandum of understanding on June 15. The national average has slipped below $4 a gallon, more than 10 percent lower than prices a month ago, according to data from the AAA motor club.
“Even thought the war appears to be winding down, people are paying a lot more for everything because of the war,” said Mark Zandi, chief economist at Moody’s Analytics. “Gas prices have come down but they’re still very, very high.”
The consumer sentiment data released on Friday rose to 49.5, up from 44.8 in May. It arrived amid a backdrop of prices that remain stubbornly high and uneasiness over inflationary spikes since the Covid-19 pandemic.
The survey, conducted monthly since 1905, captures Americans’ feelings about the economy. The latest survey had 1,380 respondents in interviews collected between May 19 and June 22.
Ms. Hsu noted consumer sentiment is still 13 percent below its level in February 2026 — before the start of the war with Iran — and nearly 20 percent below where it stood less than a year ago.
“The cost of living remains at the forefront of consumers’ minds,” Ms. Hsu said. “For the third straight month, over half of consumers spontaneously mentioned that high prices are weighing down their personal finances.”
Dr. Jeffery Wagner, a 38-year-old father of two in Denver, said that his lifestyle has changed because of higher prices. Already saddled with student debt and the rising cost of child care, he said that his family travels less and spends more weekends at home.
“I feel like so many things underneath our feet perhaps are changing with regards to the politics and the economic realities of today that make it seem like the future is just so much more unknown,” Dr. Wagner said.
The latest Consumer Price Index report on inflation showed prices rising 4.2 percent in May from a year earlier. While a big driver was energy prices — up 23.5 percent since the year before — food prices also climbed 2.7 percent year over year.
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