Consumer sentiment dropped about 6% from last month, landing around 11% below a year ago amid continued worries that inflation will remain elevated for the foreseeable future, according to the University of Michigan Surveys of Consumers.
Sentiment declines in August were seen across all political groups and were particularly acute among Republicans. Groups that are typically less equipped to absorb increases in the cost of living also exhibited stronger declines in sentiment, including older consumers, lower- and middle-income consumers, and those without a college degree.
"With ongoing policy uncertainty including the Iran conflict, consumers anticipate further increases in gasoline prices both in the short and long run," said U-M economist Joanne Hsu, director of the surveys. "In addition to the pocketbook issues that have been central to consumers' views of the economy, they are increasingly worried that prospects elsewhere in the economy could be weakening."
Expected year-ahead business conditions fell 10%, along with a 13% drop for the five-year horizon. Any reescalation of trade tensions will likely exacerbate these trends. This release covers interviews completed between July 28 and Aug. 24.
