For the second month in a row, Americans appeared more confident about their personal finances in July, lifting a closely watched indicator of the consumer’s mood to its second consecutive double-digit monthly gain. That was the good news, but a 12% rise in the University of Michigan’s Consumer Sentiment Index only brought the 74-year-old survey to a level of 55.2, slightly more than 10 points above its all-time low of 44.8, which was set in May.
“Broad-based improvements were seen across all groups by income, education, wealth, age and political party,” Joanne Hsu, director of the university’s Surveys of Consumers, stated in a press release. “Five-year expected business conditions reached a 12-month high, though it remains well under its historical average. Despite recent gains, sentiment is 11% below a year ago, reflecting a generally somber view of the economy amid five years of elevated inflation and persistent high prices.”
Hsu said consumers “remain focused on pocketbook issues like purchasing power, while political or military developments remain more in the background,” including the Iran war, although the conflict has driven gasoline prices up and it intensified during the month. The university’s index was released on the last day of July and involved interviews with consumers that covered the period from June 23 to July 27. The survey focuses on respondents’ personal finances and the cost of living.
Meanwhile, The Conference Board’s Consumer Confidence Index, which homes in on consumers’ impressions of the job market, “edged down,” in the think tank’s assessment, by 1.4 points, to 90.8, from an upwardly revised 92.2 in June. Also, consumers’ assessments of current business and labor market conditions worsened for the third month in a row. Their short-term outlook was unchanged. The survey period was July 1-22.
“Consumer confidence moderated slightly in July, continuing a general downward sloping trajectory since late 2021,” Dana M. Peterson, The Conference Board’s chief economist, stated in a press release. “The Present Situation Index was less positive for a third consecutive month, while the Expectations Index remained in negative territory.
“Consumer appraisals of current business conditions and, to a lesser extent, perceptions of the current labor market both softened,” she added. “Looking ahead, consumers anticipate little improvement in business conditions over the next six months, but expectations for the labor market were slightly less negative. Expectations for household incomes moderated but remained optimistic overall.”
On a six-month moving average, The Conference Board said consumers younger than 35 remained the most confident age group; confidence among people between the ages of 35 and 54 showed the most improvement. Independents and Democrats were less confident, and Republicans “were somewhat more positive,” the think tank said. Home and auto purchase expectations “continued their upward trend,” and consumers also were planning to spend more on services during the next six months.
Perceptions of the labor market remained poor. The percentage of consumers who said jobs were difficult to get fell slightly, to 21.5%, but that is not far from the January 2021 level of 22.8%, the worst mark of the past five years for the category.
In the University of Michigan survey, consumers’ year-ahead expectations for inflation eased slightly, to 4.2% from 4.6% in June — still an elevated reading. In February, before the Iran war began, the expectation was for 3.4% inflation a year later.
As measured by both major national indicators, the cost of living eased in June. The Personal Consumption Expenditures Price Index, the Federal Reserve’s preferred inflation gauge, fell 0.1% during the month but rose 3.7% on a year-over-year basis, keeping it well above the Fed’s 2% target. It was up 4.1% in May. The core PCE index, which strips out the volatile food and energy categories, rose just 0.1% for June and 3.3% year-over-year. It was up 3.4% in May.
The June reading of the Consumer Price Index showed inflation falling 0.4% and rising 3.5% year-over-year, with core CPI unchanged for the month and up 2.6% year-over-year. “While it’s unclear if or when the central bankers might raise the [federal] funds rate, there’s plenty of concern that inflation’s running unchecked,” Kate Wood, a lending expert at NerdWallet, told CBS News. “Between that and Iran, we’re seeing Treasury yields surge, and mortgage rates are being dragged up along with them.”
The Commerce Department said at the end of July that the U.S. economy slowed to a sluggish 1.5% in the second quarter. Economists expected at least 2% growth. “It’s an economy that’s doing OK,” Brian Bethune, an economics professor at Boston College, told The Washington Post. “It’s not overheating. It’s not underheating.”
Meanwhile, the mood among the nation’s small businesses improved in June. The National Federation of Independent Business said its Small Business Optimism Index climbed 2 points, to 97.4, putting it within range of its 52-year average of 98. The NFIB’s Uncertainty Index, which measures how confident member owners are about the economy’s prospects in the months ahead, also skewed positively, falling 2 points, to 89, although that reading still kept it far above its historical average of 68.
“Current economic conditions present small business owners with both encouraging developments and ongoing challenges,” NFIB chief economist Bill Dunkelberg stated in a press release. “Lower fuel costs provide welcome relief for businesses, as well as consumers, with firms anticipating improved operating conditions over the next six months. While there have been improvements in the overall environment, high interest rates and modest economic growth are causing owners to approach hiring and capital spending with caution.”
The NFIB said the net percentage of member owners who expect the economy to improve in the coming months rose 10%, to 13%, seasonally adjusted, improving for the first time in 2026. Twenty-one percent of member business owners said in June that inflation was their most serious business problem; 19% cited labor quality.
A seasonally adjusted 32% of member owners reported job openings that they could not fill, up 3% from the previous month’s 29%, which was the lowest level since May 2020. A net 28% of owners, also seasonally adjusted, reported raising pay, down 3% from the previous month. The NFIB said its Small Business Employment Index was essentially flat at 100.2 in June. The historical average is 100. The index is a relatively new measure from the NFIB. The trade group said a higher index number reflects an overall tighter labor market; a lower index reflects an overall weaker market.
Confidence among the nation’s home builders slipped again in July and remains well below where the industry’s top trade group would like it to be. The National Association of Home Builders said its NAHB/Wells Fargo Housing Market Index fell 2 points, to 34, from an upwardly revised 36 in June, marking the 15th consecutive month that the index has been below 40, a streak the NAHB said it has not seen since the mortgage foreclosure crisis during 2011 and ’12.
“Many potential buyers remain on the sidelines as they wait for lower mortgage rates, more certainty on inflation and a clearer economic outlook,” NAHB chairman Bill Owens, a home builder and remodeler from Worthington, Ohio, stated in a press release. “The recently enacted 21st Century Road to Housing Act contains important provisions on land use and zoning, regulatory reform, and financing tools that address obstacles facing builders and buyers, but these reforms will take time to implement.”
“With the HMI below 40 for 15 straight months, affordability remains the homebuilding industry’s primary challenge, as elevated mortgage rates, costly land, rising material prices and persistent skilled labor shortages continue to affect the market,” added NAHB chief economist Robert Dietz in the same press release. “Looking ahead, the newly enacted housing law is a positive step that will help expand housing supply and lower overall housing costs, although more policy change is needed at the state and local level.”
The July survey found that 37% of builders cut prices, up 2% from June. The NAHB said the use of sales incentives was 63% in July, up slightly from 62% in June and marking the 16th consecutive month that the share has been 60% or more.
Results in the index’s three subcategories were worse in July. The index that gauges current sales conditions fell 1 point, to 37; the index that measures future sales dropped 2 points, to 43; and the index that charts the traffic of prospective buyers showed a 2-point decline, to 23. As with the overall sentiment index, any number below 50 is indicative of poor business conditions.
Despite the affordability challenges, sales of newly built, single-family homes rose 1.6% in June from the previous month, to a seasonally adjusted annual rate of 628,000, in the monthly report from the federal Department of Housing and Urban Development. The pace is, however, down 5.6% from the same month a year earlier.
“The pace of new home sales has remained constrained in recent months by elevated mortgage rates,” Owens, of the NAHB, stated in a press release. “Builders continue to use incentives to support sales, with NAHB survey data showing that 62% of builders offered some form of incentive in June.”
Added NAHB’s Dietz in a statement: “New home sales are gaining some momentum at the more affordable range of the market, with homes priced below $300,000 accounting for 23% of June sales, up from 16% a year earlier. However, that price point is generally only achievable in markets with lower development and construction costs, particularly with respect to lower state and local regulatory costs.”
The median sale price of a new single-family home in June was $398,300, down 3.3% from May and down 2.7% from a year earlier. Meanwhile, existing home sales fell in June. The National Association of Realtors said sales dropped 2.4% to a seasonally adjusted annual rate of 4.1 million. Sales were 2.8% higher on a year-over-year basis. The trade group said the median existing home sales price in June was $440,600, up 1.8% from May.
“The back-and-forth in monthly home sales activity, driven by mild fluctuations in mortgage rates, shows how sensitive home buyers are to affordability conditions,” NAR chief economist Lawrence Yun stated in a press release. “However, job gains — more than half a million since the beginning of the year — will continue to provide support for the housing market.
“The median home price has reached an all-time high,” Yun added. “Even so, affordability is better than a year ago because wage growth is outpacing home price growth. However, progress on long-term housing affordability could be hampered if inventory growth continues to stall. Without consistent gains in inventory, home prices can accelerate. It is critical to introduce more supply to the market to widen the opportunity for homeownership.”
This story originally appeared in the September 2026 issue of Soundings Trade Only.
