The US-Iran agreement pushed down oil prices, which transmitted to end-users: In June, Michigan consumer confidence rebounded from a low point but remains at a historically low level.

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The drop in gasoline prices has brought some relief to American households troubled by inflation, boosting consumer confidence from historic lows, though overall sentiment remains fragile and high price pressures persist.

Data released by the University of Michigan on Friday showed that the final index of consumer confidence rose to 49.5 in June, higher than the historic low of 44.8 set in May and also above the preliminary reading, but still the second lowest level on record since the 1970s.

Meanwhile, consumers' inflation expectations for the coming year fell from 4.8% to 4.6%, and the 5- to 10-year inflation expectation dropped to 3.3%, erasing last month's gains.

Joanne Hsu, the director of the survey, noted that the improvement in consumer confidence is reflected among groups of different income levels and political affiliations, but "the cost of living remains the top concern for consumers," with more than half of respondents proactively mentioning high prices dragging down their personal financial situation.

Nevertheless, data released earlier this week showed that consumer spending, adjusted for prices, accelerated in May, indicating that overall household demand in the U.S. remains resilient.

Gasoline Price Drops Boost Confidence, High Inflation Pressure Persists

Over the past few weeks, average U.S. gasoline prices have fallen by more than 60 cents per gallon cumulatively, becoming the main driver of this rebound in confidence. However, inflation remains at a three-year high, oil prices are still above pre-war levels, and American household budgets remain under pressure.

Although the current conditions sub-index rebounded in June, it is still near historical lows. The index measuring consumers' feelings about their personal financial situations improved over May, but remains close to the lowest level since 2009. The willingness to purchase durable goods also remains sluggish.

Regarding the outlook, U.S. consumers' views on their own financial prospects and the medium- to long-term economic trend have both improved. The University of Michigan's expectations sub-index climbed to a three-month high.

Outlook Expectations Improve, Short-term Impact of Iran Situation May Be Limited

Hsu stated that the survey shows consumers generally believe the impact of the Iran war on the economy may be limited to the short term.

According to media reports, a temporary U.S.-Iran agreement has led to the resumption of shipping through the Strait of Hormuz, increased crude oil supply, and lower oil prices. Although a container ship was attacked on Thursday, cargo traffic through the strait is still ongoing.

However, rising transportation and raw material costs may gradually be passed on to end consumers in the coming months, and households still face the risk of rising prices across multiple product categories. The statistical period of this survey was from May 19 to June 22.

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