Consumer Sentiment Index Declines in August 2026

The University of Michigan's consumer sentiment index indicates a decline in public opinion about the economy for August 2026, with an overall sentiment drop of 8% compared to July. The index decreased from 55.2 to 51, although it remains above the lows recorded in the spring when gasoline prices were high. Inflation expectations showed stability, with anticipated inflation rising to 4.3% for the next year, while the five-year expectation remained at 3.3%. Notably, Republican respondents experienced the most significant decline, with their sentiment now 19% lower than before the Iran war and at its lowest since the 2024 election. Joanne Hsu, director of the Michigan survey, noted that the decline in sentiment was widespread, particularly among older consumers, lower-income individuals, and those without a college degree, who are more susceptible to inflation's impact on purchasing power. Only 8% of consumers expect their income growth to surpass inflation in the coming year, a decrease from 18% in December 2024.