U.S. Consumer Sentiment Rises Amidst Eased Trade Tensions and Geopolitical Concerns
U.S. consumer sentiment improved in June due to eased trade tensions between the U.S. and China, but concerns over Israel's missile strikes on Iran affected global markets. Although inflation expectations improved, oil prices surged, potentially impacting gasoline costs. The Federal Reserve will monitor tariffs' economic effects in their upcoming meeting.
Amidst the backdrop of eased trade tensions between the U.S. and China, U.S. consumer sentiment saw its first improvement in six months this June. The University of Michigan's Surveys of Consumers revealed a rise, though concerns mounted over geopolitics as Israel's missile strikes on Iran spurred oil prices to multi-month highs, impacting global stock markets.
Despite the uptick in sentiment, consumers remain anxious about inflation due to rising oil prices, potentially affecting gasoline costs. Raymond James' chief economist, Eugenio Aleman, warns that these improvements may be short-lived given ongoing geopolitical risks. However, consumer inflation expectations saw a decline alongside the rise to 60.5 in the Consumer Sentiment Index, from May's 52.2.
While sentiment rose across various demographics, downside economic risks persist despite the U.S. and China's progress in trade discussions, including a reduction in tariffs to 30%. The Federal Reserve's upcoming meeting will consider these factors while maintaining current interest rates, as consumers remain wary of the broader economic outlook.
(With inputs from agencies.)
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