Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Consumer confidence in the United States declined in August, driven by a weaker-than-expected jobs report and the implementation of new tariffs by President Trump. The Conference Board reported a 1.3-point drop in its consumer confidence index to 97.4, as surveyed consumers expressed concerns regarding tariffs, rising prices, and employment prospects. This dip reflects a growing public perception of economic challenges, which often plays a significant role in political discourse and electoral outcomes.
Economic Indicators and Consumer Sentiment
The Bureau of Labor and Statistics indicated that the U.S. economy added 73,000 jobs in July, a figure that fell short of most economists’ projections of at least 100,000 new jobs. This weaker-than-anticipated performance contributed to the observed decrease in consumer confidence.
Adding to economic anxieties, new tariffs of 10 percent or higher on goods from more than 60 countries took effect earlier in the month. President Trump commented on these measures on August 6 via Truth Social, stating, “IT’S MIDNIGHT!!! BILLIONS OF DOLLARS IN TARIFFS ARE NOW FLOWING INTO THE UNITED STATES OF AMERICA!”
Understanding the Consumer Confidence Index
The consumer confidence survey is a monthly report that details consumer attitudes, purchasing intentions, and expectations for various economic factors such as inflation, stock prices, and interest rates. The index initially experienced a significant drop when President Trump first proposed tariffs but had recovered as immediate effects were not widely perceived.
However, the current decline suggests that consumers are now experiencing the impact of these policies in their daily lives. Confidence specifically fell for consumers under the age of 35, remained stable for those aged 35 to 55, and saw an increase for consumers over 55, according to The Conference Board.
Both the present situation index and the expectations index decreased this month, by 1.6 points and 1.2 points respectively. Furthermore, the number of consumers anticipating a recession over the next 12 months rose to its highest level since a peak recorded in April.
Economist Perspectives and Future Outlook
Economists have noted a growing disconnect between survey sentiment measures and the actual state of the economy. While these surveys remain important, some economists are reportedly giving them less weight than in the past, acknowledging this divergence.
Despite the overall decline in confidence, consumers’ views of their family’s current and future financial situations both showed improvement. This mixed signals highlight the complex factors influencing public perception of the economy.
The recent decline in U.S. consumer confidence underscores public concerns stemming from a slower jobs market and the impact of new tariffs. These economic sentiments are closely watched for their potential influence on policy decisions and upcoming elections.
