Consumer sentiment dips, especially among Republicans
Summary
The University of Michigan's consumer sentiment index dropped in early August 2026, showing that people feel less positive about the economy. The biggest drop in confidence came from Republicans, and many expect prices to stay high, making it harder to afford things.Key Facts
- The consumer sentiment index fell 8% in early August, from 55.2 in July to 51.
- Despite the drop, the index is still higher than the low points seen in spring 2026.
- Inflation expectations for the next year rose slightly to 4.3%, while 5-year inflation expectations stayed at 3.3%.
- Republicans showed the largest decline in economic outlook, down 19% since before the Iran war.
- Older people, lower-income groups, and those without college degrees saw significant drops in sentiment.
- Only 8% of consumers expect their income will grow faster than inflation in the next year, down from 18% six months earlier.
- The overall concern is that inflation will continue to reduce purchasing power, making it harder to buy goods and services.
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