Consumer sentiment fell back about 6% in August, declining for the first time in four months.
It is now about 20% below December 2024, when sentiment had exhibited a post-election bump, but remains above the trough in sentiment seen in April. This month’s decline was visible across groups by age, income and stock wealth, said economist Joanne Hsu, director of the University of Michigan’s Surveys of Consumers.
Current conditions dropped nearly 10%, led by a sharp decrease in buying conditions for durable goods. The expectations index weakened a touch. While expectations for business conditions weakened for both the short and long run, the outlook for future personal finances held steady this month.
“Although consumers no longer fear the catastrophic scenarios they anticipated in the wake of the April tariff announcements, they believe that the current trade environment continues to pose threats to the multiple facets of the economy,” Hsu said.
High price concerns remain top of mind for consumers
A substantial 43% of consumers spontaneously mentioned that high prices are eroding their living standards, up from 39% in July and the highest reading in five months, Hsu said. High price worries have also extended to big-ticket purchases as well. Buying conditions for durable goods fell to its lowest reading in a year, and car-buying conditions deteriorated as well, primarily on the basis of high prices.
A growing share of consumers specifically mentioned tariffs or taxes as a negative factor for car buying. Overall, spontaneous mentions of tariffs throughout the interviews rose from 57% of consumers last month to almost 62% this month, the highest reading since May 2025, concurrent with a reescalation of trade policy developments earlier this month, Hsu said.
Consumers also believe that pressures from high prices are likely to persist into the future. Their expectations about the path of inflation worsened this month, for both the short and long run.
Business conditions and labor markets expected to weaken
Consumers anticipate multiple dimensions of the economy will weaken in the future. Short-run business conditions decreased almost 8%, while long-run business conditions softened about 3%.
After improving last month, labor market expectations worsened in August, according to Hsu. About 63% of consumers expect unemployment to rise in the year ahead, up from 37% seen a year ago.
Consumer Sentiment Index
The Consumer Sentiment Index fell to 58.2 in the August 2025 survey, down from 61.7 in July and below last August’s 67.9. The Current Economic Conditions Index fell to 61.7, down from 68.0 in July and above last August’s 61.3. The Index of Consumer Expectations fell to 55.9, down from 57.7 in July and below last August’s 72.1.
About the surveys
The Surveys of Consumers is a rotating panel survey at the University of Michigan Institute for Social Research. It is based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by web. The minimum monthly change required for significance at the 95% level in the Index of Consumer Sentiment is 4.8 points; for the Current Economic Conditions Index and Index of Consumer Expectations, the minimum is 6 points.
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