U.S. consumer sentiment took a step back this week, signaling that the brief economic relief from dropping gas prices may already be wearing off. The Morning Consult Index of Consumer Sentiment (ICS) fell 0.6 points to 88.5 among adults, with declines stretching across all income brackets.
Economic Relief
This new daily data stands in contrast to the University of Michigan’s preliminary June survey, which showed sentiment rising to 48.9 from a historic May low of 44.8. However, because the Michigan index is a monthly reading, it only captured the initial early-June relief brought on by lower fuel costs. Morning Consult’s daily tracking suggests that the brief momentum has already stalled.
At the same time, Americans are bracing for more inflation. Morning Consult’s Indirect Consumer Inflation Expectations (ICIE) ticked up 0.2 percentage points to 4.8% across all income groups. This shift happened even as gas prices retreated from their May peak of roughly $4.50 per gallon, indicating that price pressures are heavily impacting sectors beyond energy.
Consumer Spending
The dip in confidence follows a massive wave of holiday travel and dining. Morning Consult data shows that overall consumer spending in May jumped 12% year-over-year, heavily concentrated in Memorial Day weekend categories. Hotel spending spiked 38%, airfares surged 42%, and restaurant visits climbed 25%.
Yet, that holiday momentum quickly shifted. The Consumer Health Index (CHI), which peaked in late 2025, slipped into negative territory in early June as high inflation expectations and geopolitical uncertainty began weighing on households.
While two consecutive months of solid payroll growth have kept the foundational labor market intact, the experience-based categories that drove May’s strength—hotels, airlines, and dining—remain the most vulnerable to a continued drop in consumer confidence. For lower-income families, the high holiday spending appeared to be a seasonal reallocation of existing funds rather than a sustainable increase in actual purchasing power.
The federal retail sales report scheduled for release on Wednesday will provide a direct look at whether broader consumer spending throughout May truly held up as strongly as the holiday numbers indicated.
Original reporting: Tampa Free Press — read the source article.
