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Consumer sentiment decreased approximately 6% in August, marking the first decline in four months.

The current figure is about 20% lower than in December 2024, when sentiment had shown a post-election surge, yet it remains above the low experienced in April. This month’s decrease was apparent across various demographics, including age, income, and stock ownership, stated economist Joanne Hsu, director of the University of Michigan’s Surveys of Consumers.

The index of current conditions plummeted by nearly 10%, predominantly influenced by a significant drop in perceived buying conditions for durable goods. The expectations index also showed minor weakening. While forecasts for business conditions declined for both the near and distant future, the outlook for personal finances remained stable this month.

“Although consumers no longer dread the dire scenarios they feared following the April tariff announcements, they perceive that the existing trade climate still poses threats to various aspects of the economy,” Hsu noted.

Concerns over high prices persist for consumers

A notable 43% of consumers spontaneously indicated that soaring prices are diminishing their living standards, an increase from 39% in July and the highest figure in five months, according to Hsu. Worries regarding high prices have also expanded to significant purchases. Buying conditions for durable goods fell to the lowest point in a year, and conditions for purchasing vehicles worsened primarily due to elevated prices.

An increasing proportion of consumers specifically referred to tariffs or taxes as adverse factors in vehicle purchases. Overall, spontaneous mentions of tariffs during the interviews rose from 57% last month to nearly 62% this month, marking the highest figure since May 2025, coinciding with a resurgence in trade policy developments earlier this month, Hsu reported.

Consumers also believe that the pressures from high prices are likely to endure in the future. Their expectations concerning inflation trends deteriorated this month, both for the short and long term.

Business conditions and job markets anticipated to weaken

Consumers predict various facets of the economy will experience decline in the future. Short-term business conditions fell nearly 8%, while long-term conditions softened by about 3%.

After an improvement last month, expectations for the labor market declined in August, according to Hsu. About 63% of consumers foresee unemployment increasing in the forthcoming year, a rise from 37% a year prior.

Consumer Sentiment Index

The Consumer Sentiment Index dropped 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, falling from 68.0 in July but higher than last August’s 61.3. The Index of Consumer Expectations decreased 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 conducted at the University of Michigan Institute for Social Research. It is founded on a nationally representative sample that provides each household in the contiguous U.S. an equal chance of selection. Interviews take place throughout the month via the web. The minimum monthly change required for statistical significance at the 95% level in the Consumer Sentiment Index is 4.8 points; for the Current Economic Conditions Index and Index of Consumer Expectations, the minimum is 6 points.

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