Public opinion about the economy appears to be souring further this month, per the preliminary release of the University of Michigan’s consumer sentiment index.
By the numbers: Overall sentiment fell 8% in the early days of August, after two consecutive months of improvement.
- The index fell to 51, from 55.2 in July. That remains above the recent lows reached in the spring, when gasoline prices were soaring.
- Inflation expectations were stable, with expected inflation over the next year ticking up to 4.3% and over the next five years unchanged at 3.3%.
The intrigue: The steepest month-to-month drop in sentiment was among survey respondents who identify as Republicans, with their outlook now 19% below readings from just before the Iran war and at the lowest since the 2024 election.
What they’re saying: “Although the early-month weakening in sentiment was pervasive across various demographic groups, notably large reductions were seen among older consumers, lower-income consumers, and those without a college degree,” said Joanne Hsu, director of the Michigan survey.
- “These groups are all particularly vulnerable to any erosion of purchasing power stemming from inflation,” she added.
- “Across all consumers, only 8% expect their income growth to exceed inflation in the year ahead, down from 18% in December 2024, a reflection of the belief that high prices will continue to be burdensome.”
