US consumer confidence falls to seven-month low as inflation fears mount

American consumers grew measurably gloomier about the economy's direction in August, with a closely watched confidence gauge falling for a second consecutive month to its lowest level since January. The Conference Board's Consumer Confidence Index slid 0.8 points to 89.4, the private research group said Tuesday, as households turned sharply more pessimistic about jobs and business conditions even though their assessment of the present improved.

The reading, drawn from a survey fielded August 3 through 16, caps a summer in which optimism about the economy's near-term trajectory has steadily eroded. It arrives alongside a separate, long-running gauge from the University of Michigan that showed a similar slide earlier in the month, suggesting the pessimism is not a quirk of one survey but a broader shift in household sentiment.

The numbers

The headline index is built from two components that moved in opposite directions. The Present Situation Index, which measures how consumers view current business and labor conditions, rose 6.8 points to 121.2, its first gain in four months. The Expectations Index, which captures household outlooks for the next six months, fell 5.8 points to 68.2 — well below the reading of 80 that the Conference Board says has historically preceded a recession within a year.

Labor market perceptions were mixed but leaned positive: the share of consumers calling jobs "plentiful" rose to 27.0% from 24.4% in July, while those calling them "hard to get" fell to 19.5% from 21.7%, pushing the labor-market differential to its best reading of the year. Inflation expectations moved the other way. Households now expect prices to climb 5.8% over the coming year, up from 5.6% in July, and survey respondents pointed repeatedly to gasoline, which averaged above $4 a gallon during the survey window, along with food costs and tariffs.

"Consumer confidence moderated slightly in August for a second consecutive month," said Dana M. Peterson, chief economist at the Conference Board, in the group's official release. "Consumers were more pessimistic about business conditions and the labor market over the next six months, which was offset by a moderate rise in the Present Situation Index."

How confidence eroded over the summer

The August reading extends a pattern that has held for most of 2026. Consumers have absorbed a run of tariff increases, a brief military conflict involving Iran that rattled energy markets, and inflation that has stayed above the Federal Reserve's target despite repeated forecasts of it cooling. The Bureau of Labor Statistics' most recent inflation report put annual price growth at 3.4% through July, with shelter and food away from home accounting for much of the monthly increase.

That backdrop shows up in the open-ended comments the Conference Board collects alongside its numerical scores. Written responses this month referenced rising fuel prices, armed conflict, food costs, trade policy and jobs more often than they did in July, according to the Conference Board. Consumers' expectations for higher interest rates also crept down slightly, with 61.3% anticipating rate increases ahead, versus 62% the prior month, even as worries about affordability persisted.

The Michigan survey, conducted independently and released earlier in the month, told a consistent story. The University of Michigan's Surveys of Consumers found its own sentiment index sliding to a preliminary reading of 51 in early August, down from 55.2 in July, ending two months of gradual improvement. Joanne Hsu, the survey's director, said the weakening was "pervasive across various demographic groups," with the sharpest declines concentrated among households least able to absorb higher prices.

Who is feeling it most

Both surveys point to the same vulnerable groups. The Conference Board found that confidence fell most among older consumers, those with lower incomes and those without a college degree — households with the least cushion against rising costs. By age, consumers under 35 remained the most upbeat of any cohort, while confidence among Gen X, baby boomers and the Silent Generation trailed well behind. By political affiliation, independents and Republicans reported softer confidence than in July, while Democrats' outlook ticked up slightly.

"The financial squeeze is real for middle- and moderate-income Americans right now. The data underscore how worried people are about the future," said Heather Long, chief economist at Navy Federal Credit Union.

Hsu, describing the Michigan findings in comments reported by financial news outlets, said the groups showing the largest reductions "are all particularly vulnerable to any erosion of purchasing power stemming from inflation." Those households tend to spend a larger share of their income on necessities such as groceries, fuel and rent, leaving them with less room to absorb price increases without cutting back elsewhere.

What happens next

Economists caution against reading a single month's dip as a recession signal, and the Conference Board itself noted that despite the drop, the share of consumers who consider a downturn "very likely" in the next year actually declined in August even as those calling one "somewhat likely" ticked higher. Retailers and forecasters will be watching whether the pessimism translates into pulled-back spending during the back-to-school and holiday shopping seasons, when consumer psychology tends to matter as much as household budgets.

The Conference Board is scheduled to release its next Consumer Confidence Index on September 29, alongside fresh readings on inflation expectations and buying plans for autos, homes and big-ticket appliances that will show whether August's mood proves temporary or the start of a longer slide. In the meantime, analysts tracking the data say the split between an improving present and a darkening outlook leaves the economy in an unusually uncertain spot heading into autumn.