Consumer sentiment improves; Retail sales rise; Tariffs send construction costs higher

Consumer sentiment increased for the first time in six months in a closely watched national survey by the University of Michigan as concerns eased over the effects of recently imposed and pending tariffs on goods imported from multiple countries.

Preliminary data showed the university’s main sentiment index posting at 60.5 for June, up from 52.2 in May though still below the 68.2 for June 2024. Numbers generally reflect the percentage of respondents with positive views of their household finances and the larger economy, based on several metrics such as income, employment prospects and inflation expectations.

“Consumers appear to have settled somewhat from the shock of the extremely high tariffs announced in April and the policy volatility seen in the weeks that followed,” Joanne Hsu, the university’s consumer survey director, said in a statement. “However, consumers still perceive wide-ranging downside risks to the economy.”

Reflecting lingering caution, Hsu noted respondents’ outlooks remain well below those of December 2024 in several categories. Those include overall business conditions, personal finances, labor and stock markets, and buying conditions for big-ticket items.

Hsu said consumers on average now expect inflation to be at 5.1% a year from now, down from 6.6% in the May survey. The government’s latest consumer price report showed annual inflation at 2.4% in May, up from 2.3% in April. 

U.S. retail sales posted slight growth in May, even as consumers slowed their stocking-up on items ahead of trade tariffs taking effect, according to the latest tracking by researchers at the National Retail Federation and news outlet CNBC. 

Sales excluding cars and gasoline rose about 0.5% from the prior month while increasing 4.4% from May 2024, based on anonymous credit and debit card purchase data collected by research firm Affinity Solutions.

“The data for May indicates that the pull-forward in consumer demand ahead of tariffs is likely dissipating,” NRF Chief Executive Matthew Shay said in a statement. “While momentum remains, the nature of consumer spending is shifting as economic uncertainty increases.”

The retail trade group said a slowing but still growing job market helped May sales rise from the prior month in six of nine tracked categories, and top year-earlier sales in seven categories. The report is considered a preview of government reporting on total U.S. retail and food service sales, with May data scheduled for release on June 17.

May’s costs for materials and services tied to U.S. construction projects increased 0.2% from the prior month and increased 1.3% overall from a year earlier, due largely to tariff-affected imports such as iron and steel, the Associated Builders and Contractors reported. Citing government data, the trade group said the increase for nonresidential projects was 1.6%.

“Construction materials prices continued to increase at a faster-than-ideal pace in May,” ABC Chief Economist Anirban Basu said in statement, noting overall costs increased 6% from a year earlier for the first five months of 2025.

“Expect this dynamic to remain over the next few quarters,” Basu said. “These data predate tariffs on iron and steel rising from 25% to 50%, which went into effect on June 4.”

Despite challenges, momentum based on the value of new U.S. nonresidential projects heading into planning improved 3.7% in May from the prior month, according to Dodge Construction Network. The data firm said 33 projects valued at $100 million or more went into planning after receiving government approvals, led largely by data centers and warehouses.