U.S. Consumer Sentiment Slips in August as Inflation Worries Persist
University of Michigan: Sentiment Drops for First Time in Four Months
The University of Michigan’s Index of Consumer Sentiment declined in August, breaking a four-month streak of gains. According to the final report released Aug. 29, the drop was largely driven by concerns about rising prices.
Survey director Joanna Hsu noted that, despite the decline, sentiment still stands 11% higher than readings in April and May, though it remains about 10% lower than levels recorded six and twelve months ago.
-
Buying conditions for durable goods fell to their weakest point in a year.
-
Current personal finances dropped 7%.
-
Expectations for future finances held steady compared with July.
Conference Board: Confidence Slips, Recession Risks Linger
The Conference Board’s Consumer Confidence Index, released Aug. 26, also showed a slight decline:
-
Overall index fell 1.3 points to 97.4.
-
The Present Situation Index slipped 1.6 points to 131.2.
-
The Expectations Index dropped 1.2 points to 74.8, staying below the recession-signal threshold of 80 for the sixth straight month.
Stephanie Guichard, senior economist at The Conference Board, said consumer confidence has been stable but subdued. She pointed to rising pessimism about job availability, fading income optimism, and renewed concerns about tariffs and higher prices.
New York Fed: Households More Optimistic Despite Higher Inflation Forecasts
The New York Federal Reserve’s July Survey of Consumer Expectations (released Aug. 8) painted a mixed picture:
-
Inflation expectations rose slightly, with one-year outlook at 3.1%, three-year outlook steady at 3%, and five-year outlook climbing to 2.9%.
-
Job security improved: expectations for a higher unemployment rate dropped to 37.4%, the lowest since January.
-
However, the probability of losing a job in the next year nudged up from 14% to 14.4%.
-
Personal finances looked better: fewer Americans reported being worse off than a year ago or expecting to be worse off a year from now.
What Consumer Sentiment Really Means
Consumer sentiment — sometimes called consumer confidence — measures how Americans feel about the economy, including jobs, wages, and personal finances.
Why it matters:
-
In 2023, consumer spending made up 67.9% of U.S. GDP (Federal Reserve Bank of St. Louis).
-
Spending patterns are heavily influenced by how confident households feel about their money.
-
Sentiment typically falls in recessions and rises during expansions, often peaking just before downturns.
Unlike hard data such as inflation (CPI), sentiment is measured through two main surveys:
-
University of Michigan Surveys of Consumers
-
Conference Board’s Consumer Confidence Survey
Both gather opinions from U.S. households and convert them into index values.
Americans’ Financial Goals for 2025: Progress Mixed
A new NerdWallet survey, conducted with The Harris Poll, shows nearly 90% of Americans set financial goals for 2025. Yet almost half (45%) say they’re not on track to meet their top goal — or aren’t sure of their progress.
-
22% adjusted their goals due to changing economic conditions.
-
66% believe financial progress feels more achievable in the second half of 2025.
-
60% feel positive about their current finances.
-
34% are actively working to improve their money situation.
August Sentiment Indexes at a Glance
University of Michigan (Final August):
-
Consumer Sentiment: 58.2 (down from 61.7 in July)
-
Current Conditions: 61.7 (down from 68)
-
Expectations: 55.9 (down from 57.7)
Conference Board (Preliminary August):
-
Consumer Confidence Index: 97.4 (down from 98.7 in July)
-
Present Situation Index: 131.2 (down from 132.8)
-
Expectations Index: 74.8 (down from 76.0)
New York Fed (July):
-
One-year inflation expectations: 3.1%
-
Five-year inflation expectations: 2.9%
-
Job loss probability: 14.4%
-
Household spending growth expectations: 4.9%
Looking Ahead
-
University of Michigan: Next survey release Sept. 12
-
Conference Board: Next report Sept. 26
-
New York Fed: Next survey Sept. 8
✅ Bottom line: While consumers remain cautious about inflation and jobs, households show resilience and modest optimism about their personal financial outlook — even as confidence readings signal potential economic headwinds.
