The University of Michigan Consumer Sentiment Index improved from a final May reading of 72.3 to June’s preliminary level of 78.9. Economists polled by Bloomberg were expecting a preliminary June reading of 75.0. The preliminary index reading in June of last year was 97.9.

Month over month, consumer sentiment rose by 6.6 index points, the second consecutive monthly gain after plunging to a low of 71.8 in April. The percentage increase in the index was 9.1% month over month, and the year-over-year decline was 19.7%.

The consumer expectations subindex increased by 7.2 points, from 65.9 a month ago to 73.1 (up 10.9%), while the current conditions subindex rose from 82.3 to 87.8 (up 6.7%).

Year over year, the current conditions subindex fell by 21.5% and the consumer expectations subindex dropped by 18.1%.

The survey’s chief economist, Richard Curtin, commented:

Consumer sentiment posted its second monthly gain in early June, paced by gains in the outlook for personal finances and more favorable prospects for the national economy due to the reopening of the economy. The turnaround is largely due to renewed gains in employment, with more consumers expecting declines in the jobless rate than at any other time in the long history of the Michigan surveys.

While that optimism may be due to the job losses resulting from the COVID-19 pandemic being so great than anything looks like an improvement, it remains true that before consumers will begin spending more and driving up demand, they have to be confident that the scare is well and truly behind us.

In that regard, Curtin noted:

Despite the expected economic gains, few consumers anticipate the reestablishment of favorable economic conditions anytime soon. Bad times financially in the economy as a whole during the year ahead were still expected by two-thirds of all consumers, and a renewed downturn was anticipated by nearly half over the longer term. … [The] record level of income uncertainty has had a significant impact on consumers’ willingness to make discretionary purchases, although uncertainty has slightly eased recently. Importantly, these concerns have also been mitigated by deep discounts on prices and interest rates.

While the U.S. and global economies are taking steps to return to some semblance of normalcy, there have been some silver linings to the COVID-19 pandemic.

The U.S. government has authorized $3 trillion in federal spending to offset the economic damage of the pandemic, but that funding has been criticized for being misdirected or inadequate.

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