New data from the University of Michigan found that consumer trust slipped in August as Americans became more worried about inflation.
The university’s consumer sentiment index fell 5% from July, down to 58.6 with a preliminary result in August. This shows a 13.7% decrease compared to the same month last year. Research Director Joan Hussou said the recession is driven primarily by growing concerns about inflation.
The index measuring the current economic situation fell 10.4% a month to 60.9, but the forecast index fell from 0.9% to 57.2, down more than 20% from the previous year.
Inflation expectations have also changed high. Consumers currently expect prices to rise 4.9% next year from 4.5% in July. Long-term inflation expectations rose from 3.4% last month to 3.9%.
“This month we ended for the second straight month of recession inflation due to short-term expectations and third straight month of long-term expectations,” HSU said.
Other measures also reflect weaker confidence. The purchase terms for durable products fell 14% and consumer prices increased, reaching the lowest level in a year. Although the current personal finances ratings have slipped, future fiscal expectations have been marked slightly among the small profits of income outlook.
“Overall, consumers are no longer brave for the worst-case scenario for the economy, feared in April when mutual tariffs were announced and then suspended,” HSU said. “However, consumers continue to expect both inflation and unemployment to worsen in the future.”
