In a survey conducted by the University of Michigan, U.S. consumer sentiment unexpectedly declined for the first time since April, and inflation expectations rose amid concerns about the impact of tariffs.
The preliminary August Sentiment Index fell to 58.6 from 61.7 a month earlier, according to data from the University of Michigan released Friday, August 15. The Index was at 67.9 a year ago.
The University’s Sentiment Survey found that the current conditions gauge fell to a three-month low of 60.9, down from 68.0 in July and 61.3 a year earlier. The Expectations Index notched down to 57.2 from 57.7 in July and 72.1 in August 2024.
The University conducted the survey from July 29 to August 11.
Surveys of Consumers Director Joanne Hsu said, “Consumer sentiment fell back about 5 percent in August, declining for the first time in four months. This deterioration largely stems from rising worries about inflation. Buying conditions for durables plunged 14 percent, its lowest reading in a year, on the basis of high prices. Current personal finances declined modestly amid growing concerns about purchasing power. In contrast, expected personal finances inched up a touch along with a slight firming in income expectations, which remain subdued. Overall, consumers are no longer bracing for the worst-case scenario for the economy feared in April when reciprocal tariffs were announced and then paused. However, consumers continue to expect both inflation and unemployment to deteriorate in the future.
“Year-ahead inflation expectations rose from 4.5 percent last month to 4.9 percent this month. This increase was seen across multiple demographic groups and all three political affiliations. Long-run inflation expectations also lifted from 3.4 percent in July to 3.9 percent in August. This month ended two consecutive months of receding inflation for short-run expectations and three straight months for long-run expectations. Still, both readings remain well below the highs seen briefly in April and May 2025.”
