Preliminary consumer sentiment fell by 5% in August, marking the first decline following four consecutive months of increases.
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The University of Michigan’s preliminary Index of Consumer Sentiment came in at 58.6, below the expectation for 62.0 and falling from 61.7 in July.
“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,” said Surveys of Consumers Director Joanne Hsu. “However, consumers continue to expect both inflation and unemployment to deteriorate in the future.”
Year-Ahead Inflation Expectations Jump to 4.9%
Consumers expect more inflation in the short term, with year-ahead expectations at 4.9% compared to 4.5% in July. Long-term expectations are also on the rise, coming in at 3.9% and rising from 3.4% a month ago. Both figures erased two consecutive months of falling expectations.
Recent economic data has suggested that inflation could be making a comeback. July’s Producer Price Index (PPI) rose by a concerning 0.9% month-over-month, the highest increase since June 2022. On top of that, July’s core Consumer Price Index (CPI) grew by 3.1%, above the estimate for 3.0%.
Track preliminary consumer sentiment updates and other key events with TipRanks’ Economic Calendar.
