Public opinion regarding the economy shifted downward in August according to new data from the University of Michigan. The preliminary consumer sentiment index fell 8% this month, dropping to 51 from 55.2 in July. This decline ends a two-month trend of improvement and signals renewed pessimism among the general public.
The decrease is most pronounced among respondents who identify as Republicans. Their current outlook sits at 19% below levels recorded prior to the Iran war, representing the lowest point since the 2024 election. The survey results show this drop is not limited to one group but persists across various demographics.
Joanne Hsu, director of the Michigan survey, identified older consumers, lower-income households, and those without a college degree as the segments most affected by current economic conditions. These groups remain sensitive to the loss of purchasing power driven by persistent inflation. The survey highlights that few consumers expect their income gains to outpace rising prices in the coming year.
While inflation expectations remained largely stable, with a slight uptick to 4.3% for the next year, the broader belief is that high prices will remain a burden. This shift suggests that even as markets move, the lived experience for many households is still defined by the pressure of inflation.