US Consumer Sentiment Falls to 51.0 in August

U.S. consumer confidence fell sharply in early August, with sentiment dropping to its lowest level in months as households grew more pessimistic about inflation and the economy, according to a preliminary reading from the University of Michigan released on Friday. The Consumer Sentiment Index fell to 51.0 in August from 55.2 in July, marking a decline of nearly 8 percent and ending two consecutive months of improvement. The reading came in well below economists' expectations of 54.5.

The decline was broad-based, but particularly pronounced among older consumers, lower-income households, and those without a college degree. Joanne Hsu, director of consumer surveys at the university, noted these groups are especially vulnerable to any erosion of purchasing power from inflation. The survey also revealed a significant political shift, with sentiment among Republicans dropping sharply to its lowest level since the 2024 election, now 19 points below readings from just before the conflict in the Middle East began.

A key driver of the gloomier outlook is the persistent burden of high prices. While the annual inflation rate has eased from a peak of 4.2 percent in May to 3.4 percent in...