The University of Michigan’s consumer sentiment index fell to 51.0 in early August 2026, down from 55.2 in July and below market expectations of 54.5, halting a two-month streak of improvement. Both major components weakened: the current conditions index declined to 51.8, while the expectations index slid to 50.6.
The downturn was broad-based across political and demographic groups, with especially pronounced declines among older, lower-income, and less-educated consumers—segments that tend to be more vulnerable to rising prices. Expectations for business conditions deteriorated markedly, with assessments for the year ahead dropping 11% and longer-term expectations down 17%.
Inflation concerns edged higher. Year-ahead inflation expectations rose to 4.3% from 4.2%, while long-term expectations were unchanged at 3.3%. Only 8% of consumers now anticipate their incomes will outpace inflation, a steep decline from 18% in December 2024.
