US consumer confidence rises to five-month high in July but tariff concerns continue to suppress optimism

Preliminary data released by the University of Michigan in the United States shows that the consumer confidence index in July rose to the highest level in five months, benefiting from improved expectations for the economy and inflation. The data shows that the preliminary consumer confidence index for July was 61.8, higher than June's 60.7. However, overall confidence levels are still lower than most of last year. In terms of inflation expectations, respondents expect prices to rise at an annual rate of 4.4% in the next year, lower than the 5% in the previous month, and the lowest level since February this year. At the same time, consumers expect prices to rise on average by 3.6% annually over the next five to ten years, also the lowest in five months. Despite a slight improvement in confidence, consumer concerns about the economic outlook have not completely dissipated, especially as uncertainty related to tariffs is still limiting overall optimism. "Compared to a year ago, consumers' expectations for the business environment, labor market, and even personal income remain weak," said Joanne Hsu, director of the University of Michigan's Consumer Survey Project, in a statement. However, the rise in the confidence index in the past two months shows that consumers believe the risks of the worst-case scenarios they were worried about in April and May have eased. Hsu also pointed out that consumers' perceptions of their financial situation have improved, possibly driven by the rise in the stock market. It is worth noting that this survey ended on July 14, after the former US President Donald Trump signed a new budget bill, which extended tax cuts and provided new tax benefits for tip earners. However, Hsu also warned that if there are signs of new tariffs or a resurgence in inflation, it could weigh on consumer confidence. Looking at the sub-indexes, the current conditions index rose from 64.8 last month to 66.8, while the expectations index increased slightly to 58.6. The rise in consumer confidence this time was mainly driven by improved sentiment among Republican supporters and independent voters.