The preliminary consumer sentiment survey from Reuters and the University of Michigan rebounded for the first time since January, reaching a score of 56.6 in July from June's reading of 56.4.
The consensus was expecting a further decline to 55.5.
According to the report, 90% of respondents said they thought the U.S. economy was in recession, with the downturn expected to deepen further.
However, the outlook remains grim with the consumer outlook index falling to 48.3 in July from 49.2 in the prior report, while the current conditions index rebounded to 69.5 from 67.6 in last month's final report.
One-year inflation expectations moved up to 5.3% from last month's 5.2% and currently stands at the highest level since 1981. Just four months ago, inflation expectations were at 3.6%.
By Erik Kevin Franco and edited by Nancy Girgis