Consumers and businesses appear to be less concerned about tariffs, as recent surveys indicate an improvement in sentiment despite ongoing trade policy uncertainties. According to a Yahoo Finance report, the Michigan Consumer Sentiment Index rose to 61.8 in July, marking the highest level since February. This development comes amid a backdrop of tariff announcements that previously unsettled markets.
Read also: Key U.S. Asian Allies Under Tariff Pressure Deadline
Consumer inflation expectations for the next year have decreased to 4.4%, suggesting that fears of price hikes due to tariffs are waning. This optimism is reflected in the June retail spending data, which showed a notable increase, indicating a more confident consumer outlook. Heather Long, chief economist at Navy Federal Credit Union, noted that the economy’s resilience against various challenges is a positive sign for consumer spending.
Manufacturers are also feeling optimistic, as reflected in recent surveys. The New York Federal Reserve’s Empire State Manufacturing Index rose by 22 points in July, while a similar survey by the Philadelphia Federal Reserve reported an increase in business activity and future business conditions.
Despite potential risks, such as the looming threat of increased tariffs on Mexico, Canada, and the European Union if trade deals aren’t reached by August 1, consumers seem to believe that any inflationary effects will be temporary. Jeffrey Roach, chief economist at LPL Financial, expressed confidence that conditions will improve by 2026, even if consumer inflation rises in the coming months.
Source: IndexBox Market Intelligence
