Washington\u00a0\u2014\u00a0\n <\/p>\n
\n Lower gas prices helped Americans feel more optimistic about the economy early this month, though that relief might be short lived if the conflict in the Middle East continues to intensify.\n <\/p>\n
\n The University of Michigan\u2019s latest survey of Americans, released Friday, showed that consumer sentiment surged 10% early this month to a preliminary reading of 54.4, the highest point since February.\n <\/p>\n
\n \u201cConsumer sentiment climbed to its highest reading since February of this year on the basis of easing price pressures at the pump in recent weeks,\u201d Joanne Hsu, the survey\u2019s director, said in a release. \u201cThis month\u2019s rise in sentiment was pervasive across the population, seen across groups by age, income, wealth, and political party.\u201d\n <\/p>\n
\n \u201cHowever, with prices remaining frustratingly high, consumers are hardly ebullient about the economy; sentiment is down 12% from a year ago,\u201d she added.\n <\/p>\n
\n Sentiment has already mostly recovered from the record low reached in May, as the war with Iran sent energy prices skyrocketing, though it remains below pre-war levels. Consumer sentiment is closely tied with gas prices, so any recovery hinges on whether energy markets stabilize, which largely hinges on a permanent solution to the conflict in the Middle East. On Friday, attacks between the United States and Iran widened as the war showed no signs of de-escalating.<\/a>\n <\/p>\n \n However, even if sentiment reverses course, it may not mean much for economic activity, since sentiment hasn\u2019t been a good predictor of future spending patterns in recent years. Retail spending<\/a> in June grew just 0.2%, according to Commerce Department data released Thursday, though when excluding higher gas prices (since the figures are not adjusted for inflation), spending was up by a solid 0.7% that month.\n <\/p>\n \n Spending largely hinges on the state of the labor market, which remains in decent shape with unemployment at a low 4.2% and new applications for unemployment assistance still at historically low levels. So long as Americans aren\u2019t out of work, they will continue to have the means to spend, even if they\u2019re feeling lousy.\n <\/p>\n \n Americans have unmistakably soured on the economy, according to various surveys, as the economic shocks of recent years have driven up the cost of living. Americans\u2019 expectations for inflation in the year ahead, according to the Michigan survey, declined to 4.2% this month from 4.6% in June, but it \u201csubstantially exceeds the 3.4% seen in February before the Iran conflict began, along with all 2024 readings,\u201d the release said.\n <\/p>\n