WASHINGTON (Reuters) -U.S. consumer sentiment rebounded in early June as inflation fears subsided and households grew more optimistic about future economic growth and employment, a survey showed on Friday. The University of Michigan said its preliminary consumer sentiment index increased to 86.4 in the first half of this month from a final reading of 82.9 in May. Economists polled by Reuters had forecast the index rising to 84. “Stronger growth in the national economy was anticipated, with an all-time record number of consumers anticipating a net decline in unemployment,” survey director Richard Curtin said in a statement. Curtin said the improvement in sentiment was largely led by middle-and higher-income households, reflecting the continued uneven nature of the economic recovery. The survey’s gauge of current economic conditions edged up to a reading of 90.6 from 89.4 in May. Its measure of consumer expectations rose to 83.8, the highest since February 2020, from 78.8. “Overall, taking into account the progress made in reopening and normalizing the economy as well as the state of the vaccine rollout, there is much more good in this report than bad,” Thomas Simons, money market economist at Jefferies, said in a note. The survey’s one-year inflation expectations fell to 4.0% from 4.6%, while its five-to-10-year inflation outlook dropped to 2.8% from 3.0% in May. While consumers have a brighter view of the job market and economy than they did in May and their inflation worries eased somewhat, people still remain concerned about high prices for things such as cars and homes. “Spontaneous references to market prices for homes, vehicles, and household durables fell to their worst level since the all-time record in November 1974,” Curtin said. “These unfavorable perceptions of market prices reduced overall buying attitudes for vehicles and homes to their lowest point since 1982.” “Consumers tend to overreact to inflation, predicting it will be higher than it turns out to be, especially in volatile times such as these,” Robert Frick, corporate economist with Navy Federal Credit Union, wrote in a note. “However, inflation perceptions can quickly turn. Should supply chain issues in auto manufacturing get ironed out, and prices of new and used cars moderate or even fall, that will go a long way to quelling inflation fears.” Additional reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Jonathan Oatis Our Standards: The Thomson Reuters Trust Principles.