U.S. consumers were more optimistic in June as once-soaring gasoline prices eased, and the government reported that a key measure of the nation’s trade deficit narrowed more than expected in the first quarter.
Reuters reported the University of Michigan’s preliminary June index of consumer sentiment read 82.4, up from May’s final reading of 79.1 and above Wall Street expectations for a reading of 79.0.
Analysts said the rise in confidence reflected an attitude that another widely expected Federal Reserve hike in official interest rates later this month will not hurt the economy.
“The fear that another rate hike might choke the economy has gone away, which is helping markets, helping stock markets and helping the consumers,” said Elisabeth Denison, economist at Dresdner Kleinwort Wasserstein in New York.
“Gasoline prices are receding from their peak, so overall maybe there is more confidence that the Fed can achieve a soft landing.”
Retail gasoline prices, which many analysts say have a significant impact on consumer sentiment, have decreased slightly from the same period a month ago, according to data from travel organization AAA.
Before the June sentiment data’s release, the Commerce Department said the U.S. current account deficit – which measures international transactions as well as physical imports and exports – narrowed more than expected in the first quarter to $208.7 billion, as exports rose more than imports.