US consumer confidence weakened in August, with University of Michigan Consumer Sentiment Index falling from 61.7 to 58.6, missing expectations of 62.1 and marking the first decline in four months. The drop was driven by a sharp fall in Current Economic Conditions Index to 60.9 from 68.0. Expectations Index edged down only slightly to 57.2 from 57.7.
While consumers are no longer bracing for the worst-case economic scenario feared in April at the height of tariff tensions, optimism remains fragile. Many still expect inflation and unemployment to worsen over the coming year, dampening any boost from earlier resilience in household sentiment.
Inflation expectations were particularly notable, with year-ahead projections rising from 4.5% to 4.9% and long-run expectations climbing from 3.4% to 3.9%. The rebound ends a multi-month easing trend and will likely catch the Fed’s attention, especially as it weighs the risk of entrenched price pressures against slowing growth.
