US consumer sentiment falls in August amid inflation concerns

consumer sentiment index inflation expectations purchasing power University of Michigan survey economic outlook

The University of Michigan’s preliminary consumer sentiment index fell to 51 in August 2026, down from 55.2 in July. This decline marks the end of a two-month period of improvement, driven by concerns over worsening inflation and deteriorating business conditions.

A significant driver of the decline is the erosion of purchasing power. Only 8% of consumers expect their income growth to exceed inflation in the coming year, a sharp decrease from 18% in December 2024. Year-ahead inflation expectations rose slightly to 4.3% from 4.2% in July.

The downturn has been particularly pronounced among older consumers, lower-income households, and those without college degrees. Sentiment also saw notable declines across the political spectrum, with Republicans reporting the strongest month-to-month drop. Geopolitical tensions, specifically those involving Iran, have contributed to the economic anxiety.

Entities

Federal Reserve · Joanne Hsu · University of Michigan

Sources

U. S. Consumer Sentiment Slides in August, Ending Recovery | SGB Media Online [sgbonline.com]

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72% of US consumers expect inflation to outpace income growth [cryptobriefing.com]

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