The July edition shows renewed optimism, according to the University of Michigan’s preliminary results, as the Consumer Sentiment Index climbed to 61.8 from 60.7 in June. This slightly surpasses analyst expectations and marks the index’s highest point in five months—February, just after President Donald Trump took office again but months before he shocked markets and allies with his “Liberation Day” tariffs in April. Still, it’s only cause for a muted celebration.

Surveys of Consumers Director Joanne Hsu characterized the results as “little changed” from June, “inching up about one index point.” She acknowledged that it’s a five-month high, but “it remains a substantial 16% below December 2024 and is well below its historical average.” A closer look at the data shows that high-wealth consumers don’t share in the generally improving outlook, either.

The glum high-wealth American

The Current Economic Conditions Index rose 3.1 points to 66.8, indicating growing confidence in near-term business and job prospects. However, the Consumer Expectations Index—reflecting expectations for the coming six months—rose only slightly to 58.6 and remains down 14.8% from last year. Notably, respondents’ outlook on their own finances fell by about 4%, signaling continued individual financial concerns despite the broader improvements. And despite a recent uptick, the surveyors highlight that feelings among high-wealth consumers are still down 17% from December 2024.

University of Michigan

Short-run business conditions improved about 8%, whereas expected personal finances fell back about 4%. Consumers are unlikely to regain their confidence in the economy unless they feel assured that inflation is unlikely to worsen, for example if trade policy stabilizes for the foreseeable future. At this time, the interviews reveal little evidence that other policy developments, including the recent passage of the tax and spending bill, moved the needle much on consumer sentiment. But there has been a movement on expectations around inflation.

Inflation expectations drop sharply

One of the most pronounced shifts in sentiment concerns inflation. Year-ahead inflation expectations dropped for the second straight month to 4.4%, down from 5.0% in June and from a peak of 6.6% in May, marking the lowest reading since February 2025.

Long-run inflation expectations also receded, falling for a third consecutive month to 3.6% (from 4.0% in June). While these are the most moderate readings in months, both remain higher than levels seen in late 2024, highlighting ongoing wariness about longer-term inflation risk.

Hsu noted that inflation remains top of mind for many Americans, with renewed optimism tempered by concerns that price increases could reignite, especially in the context of recent trade policy moves. “Consumers are unlikely to regain their confidence in the economy unless they feel assured that inflation is unlikely to worsen, for example if trade policy stabilizes for the foreseeable future,” Hsu explained.

Respondents reported that legislative developments such as recently enacted tax and spending bills had little discernible effect on their overall sentiment.

The uptick in consumer confidence comes even as recent economic data show robust retail sales and resilient labor markets, suggesting a disconnect between consumer perceptions and macroeconomic trends.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.