Consumer sentiment fell to 51.0 in August, and the piece of it that fell hardest is what households expect of business conditions five years out

51.0.

That is the University of Michigan's preliminary reading of consumer sentiment for August, set against a final July figure of 55.2 and 58.2 in August 2025. The fall on the month is 7.6 percent. The fall on the year is 12.4 percent.

July was the recovery month. The index climbed 5.7 points then, from 49.5 in June, and August hands back 4.2 of them.

Both components fell, and one fell twice as fast

Current economic conditions came in at 51.8 against 54.8 in July, down 5.5 percent on the month and 16.0 percent on the year.

Expectations came in at 50.6 against 55.4, down 8.7 percent on the month and 9.5 percent on the year. So the forward-looking half of the index did most of the damage, and against a year ago the two halves have swapped places: current conditions carry the larger annual decline, expectations the larger monthly one.

Personal finances held. Business conditions did not.

The split inside the survey is sharper than the headline suggests.

Joanne Hsu, who directs the surveys, reports that views of personal finances saw only minor declines. Over the same weeks, expected business conditions sank 11 percent for the short run and 17 percent for the long run. Households were asked about their own money and about the economy around them, and they answered those two questions very differently.

The commentary also reports that the fall ends two consecutive months of improvement, and that decreases were seen across the political spectrum, with Republicans showing the strongest month-to-month decline. Republican sentiment, it says, is now 19 percent below readings just prior to the Iran conflict, and the lowest since the 2024 election.

Larger declines showed up among older consumers, lower-income consumers, and those without a college degree.

Eight percent

One line in the release is not an index at all.

Across all consumers, 8 percent expect their income growth to exceed inflation in the year ahead. The comparison the survey supplies is December 2024, when the figure was 18 percent.

Inflation expectations went the other way

Year-ahead inflation expectations ticked up to 4.3 percent from 4.2 percent in July.

The release places that against 3.4 percent in February, before the Iran conflict began, and against every reading taken in 2024, all of which were lower. Long-run expectations did not move for the third month running and stand at 3.3 percent, which the survey notes remains a bit above the 2.8 to 3.2 percent range of 2024.

Set against the monthly series, 51.0 is the lowest reading since June, which was 49.5. The survey reports no cause for the change and none is supplied here.

Final August figures are due on 28 August.