US Consumer Confidence Hits a Seven-Month Low as Inflation Stays Sticky
American consumers are feeling less confident about the economy for the fourth month in a row. The Conference Board's Consumer Confidence Index — a monthly survey that asks households how they feel about jobs, incomes, and business conditions — dropped to 89.4 in August 2026, down from 90.2 in July. That is the lowest reading in seven months. The index uses a baseline of 100 set in 1985, meaning anything below 100 indicates consumers are less optimistic than they were at that reference point. The Guardian
The drop is small — just 0.8 points — but it extends a weakening trend that has now persisted through four consecutive monthly declines. For context, the index sat consistently above 100 in late 2024 and early 2025, a level that now seems far from reach. The August reading, collected from survey responses between 3 and 16 August 2026, still falls within the range the index has occupied since the start of the year. That suggests a slow erosion rather than a sudden collapse. The Guardian
Inflation is the biggest factor at play. The US personal consumption expenditures (PCE) price index — the Federal Reserve's preferred inflation gauge, which tracks the prices people actually pay for goods and services — rose 3.7% year-over-year in June 2026, down from 4.1% in May but still well above the 2.8% level recorded before the Iran war began on 28 February 2026. Further back, the PCE index stood at 2.5% when Donald Trump was inaugurated in January 2025. The trajectory: a pre-war level near the Fed's 2% target, a war-driven surge, and now a partial moderation that has not yet returned consumers to the price stability they experienced in early 2025. The US government will release July PCE data on Wednesday, 27 August 2026, offering the next data point on whether the slowdown from May's 4.1% is continuing. The Guardian
Labor-market signals point in different directions. On the surface, 27% of consumers said jobs were "plentiful" in August, up from 24.4% in July — a tick that could reflect hiring in specific sectors. But forward-looking expectations worsened: only 14.6% of respondents expected more jobs to be available over the next six months, down from 16.4% the prior month. The Guardian
Hard payroll data back up that caution. US employers cut 23,000 jobs in July 2026. More strikingly, the Labor Department's revisions erased 103,000 jobs from previously reported May and June payrolls — a downward adjustment large enough to change how the spring labor market looks in hindsight. The unemployment rate nonetheless fell to 4.1% in July, a reminder that headline joblessness and payroll growth can diverge when labor-force participation (how many people are actively working or looking for work) and survey methodology interact. The Guardian
The July confidence reading, reported at 90.8 by the Conference Board's own release (with an upwardly revised 92.2 for June), had already missed economists' forecasts of 92.4 and marked the third consecutive monthly decline at the time. August extends that streak to four. Advisor Perspectives; The Conference Board
The broader context here is what this combination means for the Federal Reserve, which operates under a dual mandate: keeping prices stable (its target is 2% inflation) and maximizing employment. Neither goal is in crisis territory. But the direction of travel on both is unfavorable — inflation is slowing too gradually to restore pre-war purchasing power, and the labor market's soft spots are visible in the payroll revisions and declining consumer expectations for future job availability. The July PCE release on 27 August will be watched closely for whether the cooling from 4.1% to 3.7% extends into a third consecutive month of moderation. If it does not, consumer confidence in September may find it difficult to stabilize.
The fuller picture is a household sector absorbing the cumulative effect of a war-driven inflation shock that began in late February. Consumers who saw confidence above 100 in early 2025 have now experienced six months of readings below 92. The deterioration is not dramatic in any single month, but the persistence of the decline — combined with the gap between current inflation and the 2.5% level that prevailed at the start of the Trump administration — frames the economic environment voters and policymakers are navigating as the second half of 2026 unfolds.
