University of Michigan Releases Preliminary Results of Its Consumer Sentiment Index for August

On Friday, the University of Michigan released the preliminary results of its Surveys of Consumers for August.

• The Index of Consumer Sentiment fell to a reading of 51.0 in August, down 7.6% from 55.2 in July. Year-over-year, the index was down 12.4% from 58.2 in August 2025.
• Current Economic Conditions fell to a reading of 51.8 in August, down 5.5% from 54.8 in July and 16.0% from 61.7 in August 2025.
• The Index of Consumer Expectations fell to 50.6 in August, down 8.7% from 55.4 in July and 9.5% from 55.9 in August 2025.

In remarks accompanying the release, Surveys of Consumers Director Joanne Hsu said:

“Consumer sentiment fell about 8% this August, ending two consecutive months of improvement. While views of personal finances saw only minor declines, expected business conditions sank 11% for the short run and 17% for the long run. Decreases in sentiment were seen across the political spectrum, with Republicans exhibiting the strongest month-to-month decline in August. Sentiment among Republicans is now 19% below readings just prior to the Iran conflict and the lowest since the 2024 election. Although the early-month weakening in sentiment was pervasive across various demographic groups, notably large reductions were seen among older consumers, lower-income consumers, and those without a college degree. These groups are all particularly vulnerable to any erosion of purchasing power stemming from inflation. Across all consumers, only 8% expect their income growth to exceed inflation in the year ahead, down from 18% in December 2024, a reflection of the belief that high prices will continue to be burdensome.

Year-ahead inflation expectations ticked up from 4.2% in July to 4.3% this month. The current reading substantially exceeds the 3.4% seen in February before the Iran conflict began, along with all 2024 readings. Long-run inflation expectations held steady at 3.3% for the third consecutive month, remaining a bit higher than its 2024 range of 2.8–3.2%.”