The preliminary data by the University of Michigan showed that the Index of Consumer Sentiment fell to 58.6 in August, from 61.7 in July and 67.9 in August.
U.S. consumer sentiment fell by 5% in August, marking the first decline in four months, according to the University of Michigan’s data, attributing the drop to rising worries about inflation among Americans, who have become cautious about their expenditures due to the rollout of tariff-driven price increases in the country.
The preliminary data showed that the consumer sentiment index fell to 58.6 in August, from 61.7 in July and 67.9 in the same period a year ago. Buying conditions for durables plunged 14%, its lowest reading in a year, according to the report, while year-ahead inflation expectations rose from 4.5% in July to 4.9% in August.
The data also noted that long-run inflation expectations rose to 3.9% in August from 3.4% in July. Director of the survey at the University, Joanne Hsu, said that current personal finances declined modestly amid growing concerns about purchasing power.
“In contrast, expected personal finances inched up a touch along with a slight firming in income expectations, which remain subdued,” Hsu noted.
“Overall, consumers are no longer bracing for the worst-case scenario for the economy feared in April when reciprocal tariffs were announced and then paused,” Hsu said, adding that consumers continue to expect both inflation and unemployment to deteriorate in the future.
On Friday, data from the Commerce Department showed that U.S. retail sales rose 0.5% in July, driven by a strong surge in demand for automobiles. Apart from car sales, online retail and merchandise store sales also surged in July, likely driven in part by Amazon.com Inc.’s (AMZN) Prime Day sale.
In another report by the University of Michigan, advance buying motives by consumers have increased sharply in 2025, comparable to levels seen around the enactment of tariffs in 2018. The report also noted that 58% of consumers were planning to cut back on purchases, while 13% would stop their spending entirely on such items.
The Invesco QQQ Trust (QQQ) declined 0.42% and SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, fell 0.20% on Friday.
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