Topline
Americans became more pessimistic about the economy this month than previously suggested, according to the University of Michigan’s widely tracked survey released Friday, as consumers expressed concerns about rising prices and unemployment.
More Americans expressed concerns that tariffs would impact prices.
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Key Facts
Consumer sentiment—a measurement of Americans’ views on the economic outlook—dropped to 58.2 in August from 61.7 in July, well below the historical benchmark of 100, a reading of the University of Michigan’s survey found, after economists expected the reading to hold at a preliminary reading of 58.6.
Americans expect inflation to rise to 4.8% over the next year, above July’s projections of 4.5%, and for prices to increase 3.5% over the next five to 10 years, an uptick from 3.9% in the survey’s preliminary reading, but still above last month’s 3.4%.
The survey also found roughly 63% of consumers believe unemployment will worsen over the next year.
Joanne Hsu, the survey’s director, said in a statement that buying conditions for durable goods—long-lasting products like appliances—dropped to their lowest in a year as personal finances declined 7%, as Hsu cited “heightened concerns about high prices.”
What To Watch For
The Bureau of Labor Statistics will release unemployment data next week—the first since President Donald Trump fired its director—as Wall Street expects a slight uptick from 4.2% in July to 4.3% in August, according to FactSet. About 92,500 nonfarm jobs are projected to have been added last month, above the 73,000 recorded last month. The BLS will likely face scrutiny after Trump fired commissioner Erika McEntarfer, whom he accused of manipulating jobs data during the 2024 election to benefit Kamala Harris. Trump nominated Heritage Foundation economist E.J. Antoni as the next commissioner. Antoni, a public critic of McEntarfer, has been criticized by former Democrat officials as being “completely unqualified” for the role and alleged Antoni may abuse his role as an “extreme partisan.”
Key Background
Declining optimism among American consumers comes as inflation remained above the Federal Reserve’s 2% goal in July. Core personal consumption expenditures (PCE) price index data released earlier Friday found annual inflation hit 2.9% in July, matching economist’s projections and a 0.1% increase from June. Consumer spending increased 0.3% over the month to a four-month high, however, as the Bureau of Labor Statistics rose 0.4%. The PCE data—the central bank’s preferred reading for inflation—and upcoming jobs report will be the last before the Fed considers a possible interest rate cut in September. Fed Governor Christopher Waller, who voted in favor of a quarter-point reduction in July, said Thursday he would again support rates falling from a range of 4.25% to 4.5%, where they have sat since December. Fed Chair Jerome Powell, who has faced pressure from President Donald Trump to lower rates, has argued in favor of a cautious monetary policy, citing potential impacts of Trump’s tariffs on the economy in the near future.
Further Reading
Source: https://www.forbes.com/sites/tylerroush/2025/08/29/us-economic-pessimism-grows-as-worries-persist-over-rising-prices/
