The U.S. consumer confidence decreased during August because households anticipated rising prices from tariff increases on imported goods. The University of Michigan’s preliminary Consumer Sentiment Index decreased to 58.6 from July’s final reading of 61.7 which contradicted economic predictions of reaching 62.
Survey director Joanne Hsu explained that the decline in consumer confidence stemmed mainly from rising concerns about inflation affecting major purchases. The buying conditions for durable goods experienced their biggest yearly decline of 14% to reach their lowest point since last year.
The survey revealed that consumers now expect inflation to rise 4.9% during the next year instead of the previous 4.5% and their expectations for the next ten years increased to 3.9% from 3.4%. The rising inflation indicators make it challenging for the Federal Reserve to control prices while sustaining economic expansion.
The current decline in consumer sentiment occurs as U.S. households experience rising expenses from imported goods before all tariff effects become apparent.
