U.S. Consumer Sentiment Edges Lower
Consumers are no longer bracing for the worst-case scenario for the economy but continue to expect rising inflation and unemployment, the University of Michigan said.
ANN ARBOR, Mich. – Consumer sentiment fell back about 5% 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%, 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% last month to 4.9% this month. This increase was seen across multiple demographic groups and all three political affiliations. Long-run inflation expectations also lifted from 3.4% in July to 3.9% 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.
Source: University of Michigan, Surveys of Consumers
© 2025 Florida Realtors®