American consumers are feeling slightly less terrible about the economy, which in the current climate counts as good news. The University of Michigan’s Index of Consumer Sentiment rose to 48.9 in early June, up from 44.8 in May, a 9% monthly increase driven largely by the relief of falling gasoline prices.
To be clear, 48.9 is still a historically grim number. A year ago, the same index sat at 60.7.
Gasoline prices did the heavy lifting
The catalyst here is straightforward: gas got cheaper. National average gasoline prices peaked near $4.60 per gallon in May, then declined to somewhere between $4.09 and $4.15 by mid-June. That’s a roughly 10% drop at the pump in a matter of weeks.
This dynamic hit lower-income households hardest during May’s downturn. The Michigan survey found that 57% of respondents in May cited high prices as a primary driver of their negative sentiment. Fuel costs were the biggest culprit.
