Consumer sentiment in the US weakened in August as persistent inflation and economic uncertainty continued to weigh on households.
The University of Michigan’s preliminary consumer sentiment index fell to 51 in August from 55.2 in July, reports The Wall Street Journal.
The reading also came in below the 54.5 economists surveyed by The Wall Street Journal had expected. Despite the decline, sentiment remains above the historic lows in the mid-40s recorded earlier this year.
Joanne Hsu, director of the University of Michigan’s survey, said elevated prices and concerns about the economic impact of the Iran conflict are continuing to pressure consumers.
Says Hsu,
“Although the early-month weakening in sentiment was pervasive across various demographic groups, notably large reductions were seen among older consumers, lower-income consumers, and those without a college degree. These groups are all particularly vulnerable to any erosion of purchasing power stemming from inflation.”
Sentiment among Republicans has also deteriorated, falling more than 19% from its level shortly before the war began and reaching its lowest point since the 2024 presidential election, according to Hsu.
“Across all consumers, only 8% expect their income growth to exceed inflation in the year ahead… a reflection of the belief that high prices will continue to be burdensome.”
One positive signal for Federal Reserve officials was that consumers’ longer-term inflation expectations remained unchanged from July.
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