The June consumer confidence index, from the latest University of Michigan survey, was just adjusted upward from a preliminary 48,9 to 49,5 points. This marks the first improvement in the sentiment gauge since the Middle East conflict erupted in February.

The conflict led to the Strait of Hormuz, a crucial shipping route for energy transport between continents, being almost entirely blockaded for months. Consequently, escalating oil prices drove gasoline prices in the US near their peak. Consumer confidence plummeted to record lows in two consecutive surveys, as households had to allocate a larger portion of their budgets to fuel.

A delivery vehicle is being refueled in Chicago on 7/4. *AP*.

In recent weeks, gasoline prices have cooled as the ceasefire among parties has largely held, aiding consumer confidence recovery. According to monitoring website GasBuddy, on 22/6, the average US gasoline price dropped by USD 0,14 last week, to USD 3,85 per gallon (USD 1,02 per liter). This marks the 6th consecutive week of falling US gasoline prices, now about 15% lower than the peak set last month.

However, consumers in the country remain pessimistic compared to before the conflict erupted. University of Michigan data indicates that consumer confidence is still 13% lower than in February. This is because while gasoline prices have cooled, the general level of goods prices remains high, continuing to impact sentiment.

"This is the third consecutive month that more than half of those surveyed have mentioned high prices putting pressure on their personal finances", said Joanne Hsu, Director of Consumer Surveys at the University of Michigan.

According to data from the US Department of Commerce, the personal consumption expenditures (PCE) index for May increased by 4,1% compared to last year, the highest since 4/2023. PCE is the Federal Reserve's (Fed) preferred measure of inflation.

During its mid-month meeting, the Fed maintained its benchmark interest rate at 3,5-3,75%. However, investors and many large banks are betting the Fed will begin raising interest rates from September, with an 80% probability, according to CME Group data.

The US economy grew by 2,1% in Q1 (annualized basis), after increasing by only 0,5% in Q4 of the previous year. Researchers recently lowered their expectations for US economic growth. Experts at Morgan Stanley reduced their Q2 GDP growth forecast from 2,5% to 2,1%. Goldman Sachs also cut its forecast by an additional 0,2 percentage points, to 2,2%.

Phien An (according to Reuters, CNN)