Ann Arbor Times

Consumer sentiment in the United States declined by about 6% in August, marking the first decrease in four months, according to data from the University of Michigan’s Surveys of Consumers. The index is now approximately 20% lower than its level in December 2024, when it saw a temporary increase following the election, but remains above its lowest point observed in April.

Joanne Hsu, director of the University of Michigan’s Surveys of Consumers, noted that this month’s decline was seen across different age groups, income levels, and those with varying amounts of stock wealth. She reported that current conditions dropped nearly 10%, primarily due to a significant decline in buying conditions for durable goods. The expectations index also weakened slightly.

While consumer expectations for business conditions deteriorated both in the short and long term, views on future personal finances remained steady during August.

“Although consumers no longer fear the catastrophic scenarios they anticipated in the wake of the April tariff announcements, they believe that the current trade environment continues to pose threats to the multiple facets of the economy,” Hsu said.

Hsu added that “a substantial 43% of consumers spontaneously mentioned that high prices are eroding their living standards, up from 39% in July and the highest reading in five months.” Concerns over high prices have increasingly affected decisions regarding major purchases; buying conditions for durable goods reached their lowest level in a year and car-buying sentiment also worsened due to high prices.

An increasing number of respondents cited tariffs or taxes as negative factors influencing car purchases. Spontaneous mentions of tariffs rose from 57% last month to almost 62% this month—the highest since May—coinciding with renewed developments in trade policy earlier this month.

Consumers’ concerns about persistent inflation grew as well. Expectations for inflation worsened for both short- and long-term outlooks. Assessments for near-term business conditions dropped by nearly 8%, while long-run expectations fell about 3%.

Labor market expectations also declined after an improvement last month. According to Hsu, “about 63% of consumers expect unemployment to rise in the year ahead,” compared with just 37% a year ago.

The Consumer Sentiment Index decreased to 58.2 for August from July’s reading of 61.7 and was below last August’s figure of 67.9. The Current Economic Conditions Index stood at 61.7 (down from July’s 68.0), while remaining above last August’s value of 61.3. The Index of Consumer Expectations fell to 55.9 from July’s reading of 57.7 and was lower than last August’s mark of 72.1.

The University of Michigan Surveys of Consumers is conducted by web throughout each month using a rotating panel design based on a nationally representative sample drawn from households across the coterminous United States through random selection methods at the Institute for Social Research. Statistically significant changes require minimum monthly shifts: at least a change of 4.8 points on the Consumer Sentiment Index and six points on both sub-indices.