Consumer sentiment improved between June and July, rising to its highest level in five months, according to the latest consumer sentiment index from the University of Michigan.

Researchers found that, in general, consumers see current economic conditions as stronger than they did even a month ago. Future expectations have improved as well. But despite the recent uptick, the sentiment among high-wealth consumers with extensive stock holdings has dropped 17% since December 2024.

The index, which measures consumer attitudes about the economy, increased 1.8% month-over-month for an overall consumer sentiment reading of 61.8. While consumer sentiment has continued to improve over the past five months, it remains 16% below the December 2024 reading and is well below its historical average.

Consumer outlook on short-run business conditions improved about 8% from June, but the outlook for personal finances fell about 4%.

“Consumers are unlikely to regain their confidence in the economy unless they feel assured that inflation is unlikely to worsen, for example if trade policy stabilizes for the foreseeable future,” states the report, which is overseen by Joanne Hsu, director and chief economist of the university’s Surveys of Consumers.

Researchers found that tariffs remained top of mind, with little evidence that other policy decisions, such as tax and spending bills, had much bearing on consumer sentiment.

Consumers who were surveyed in July showed a brighter outlook for the economy, expecting year-ahead inflation to be 4.4%. In June, consumers expected year-ahead inflation to reach 5%.

Long-run inflation expectations fell for the third consecutive month. Consumers interviewed in July expect long-term inflation of 3.6%, down from 4% in June. The report states that both readings are the lowest since February 2025, but remain above December 2024 levels, “indicating that consumers still perceive substantial risk that inflation will increase in the future.”