U.S. consumer confidence fell to its lowest level in seven months in August, with Americans expressing a more pessimistic outlook on the economy, according to a report from The Conference Board. The consumer confidence index dropped to 89.4 in August, down from 90.2 in July, a decrease attributed in part to elevated gasoline prices, which have remained above $4 per gallon due to the ongoing conflict in Iran.
While consumers' views of their current situation saw a slight improvement, their expectations for the short-term economic future soured. Write-in responses to the survey indicated increased pessimism, with specific concerns raised about general prices, oil and gas prices, food costs, trade, and jobs. These frustrations, stemming from five years of elevated inflation, could present a challenge for President Donald Trump and the Republican party ahead of the midterm elections.
The Federal Reserve's preferred inflation measure, the personal consumption expenditures price index, showed a 3.7% increase in June compared to the previous year. This figure, though down from May's 4.1%, is up from 2.8% before the Iran war began on February 28 and contrasts with the 2.5% rate at the time of President Trump's inauguration in January 2025. The government is scheduled to release July's PCE data soon.
Consumers' perception of the current labor market improved slightly in August, with 27% describing jobs as "plentiful," an increase from 24.4% in July. However, this positive sentiment did not extend to the next six months, as only 14.6% expect more job availability, down from 16.4% in July. The U.S. job market experienced an unexpected slowdown in July, with employers cutting 23,000 jobs. Revisions to previous Labor Department data also erased 103,000 jobs from May and June payrolls. The unemployment rate fell to 4.1%, but this was partly due to a significant number of people leaving the labor force, reducing the pool of job seekers.