| Consensus | Consensus Range | Actual | Previous | |
| Index | 54.2 | 52.5 to 57.0 | 51.0 | 55.2 |
| Year-ahead Inflation Expectations | 4.2% | 4.1% to 4.2% | 4.3% | 4.2% |
| Index Change | -4.2 | 0.8 | ||
| Index % Change | -7.6% | 1.5% |
Highlights
U.S. consumer sentiment took a step back this month, with August’s preliminary reading coming in at 51.0 vs. 55.2 in July and 49.5 in June. This is below the consensus of 54.2 in the Econoday survey of forecasters. Consumer sentiment fell by 7.6 percent, dragged down by pessimistic expectations for both near- and long-term business conditions.
Additionally, sentiment is down 12.4 percent from August 2025 as affordability concerns tied to eroding purchasing power continue to weigh on consumers' minds.
“Across all consumers, only 8 percent expect their income growth to exceed inflation in the year ahead, down from 18 percent in December 2024, a reflection of the belief that high prices will continue to be burdensome,” the report said.
Preliminary year-ahead inflation expectations rose to 4.3 percent in August from 4.2 percent in July. This significantly exceeds the 3.4 percent reading seen in February before the Iran conflict began, along with all 2024 readings, the report said.
Long-run inflation expectations in August held at 3.3 percent from last month, staying above the 2.8 percent to 3.2 percent range seen in 2024.
Market Consensus Before Announcement
Sentiment expected to recede slightly to 54.2 in the early August report from 55.2 in the July final, up from a gloomy 49.5 in June.
Definition
The University of Michigan's Consumer Survey Center questions households each month on their assessment of current conditions and expectations of future conditions. Preliminary estimates for a month are released at mid-month and are based on about 420 respondents. Final estimates are released near the end of the month and are based on about 600 respondents.
Description
The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.
This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer sentiment index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.
Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.
