US Consumer Sentiment Weakens Despite Upward Revision

The University of Michigan's consumer sentiment index was revised upward to 51.7 in August 2026, following a preliminary reading of 51.0. However, this revision failed to boost sentiment, as it dropped around 6% from the previous month and is still about 11% lower than a year ago. This indicates that persistent concerns about inflation remaining high continue to weigh on consumer confidence.

The decline in sentiment was felt across all political affiliations, with Republicans experiencing a particularly sharp drop. Older, lower- and middle-income consumers, as well as those without investments, saw the steepest decline in their sentiment. The situation has been compounded by ongoing policy uncertainty, particularly due to the Iran conflict, which has raised expectations of further gasoline price hikes.

Consumer anxiety about economic conditions has intensified, with one-year business expectations falling by 10% and the five-year outlook dropping 13% compared to the previous year. Despite this, long-run inflation expectations have remained constant at 3.3% for the third month in a row, easing slightly from 4.2% to 4.0%.