U.S. Consumer Confidence Declines in August as Jobs, Tariffs, and Inflation Weigh on Outlook

 Confidence Index Slips for the Eighth Consecutive Month

American sentiment toward the economy weakened again in August, reflecting persistent concerns over a cooling job market, tariffs, and rising prices.

The Conference Board reported that its consumer confidence index dropped by 1.3 points to 97.4, down from 98.7 in July. While the decrease was modest and aligned with economists’ forecasts, it marked the eighth straight month of softening sentiment.

Short-Term Expectations Remain Weak

The index measuring expectations for income, business conditions, and employment over the next six months slid to 74.8, remaining well below the 80 threshold often viewed as a potential recession warning sign. Assessments of the current economic climate also eased slightly, from 132.8 in July to 131.2 in August.

Labor Market Shows Clear Signs of Strain

Despite historically low unemployment levels, multiple reports point to a gradual deterioration in labor conditions throughout the year.

Job Gains Miss Projections

Employers added only 73,000 jobs in July, falling far short of the 115,000 analysts expected. Additionally, revised data for May and June cut 258,000 jobs from previous estimates. The unemployment rate inched up to 4.2% from 4.1%, sparking market volatility. In response to the disappointing numbers, President Donald Trump dismissed Erika McEntarfer, head of the Bureau of Labor Statistics.

Job Openings and Quits Decline

Another government report showed job openings decreased to 7.4 million in June from 7.7 million in May. The number of workers quitting — a sign of optimism about finding new opportunities — also fell, indicating waning confidence in the labor market. Additional updates on August hiring and June job openings are expected next week.

Tariffs and Inflation Add Pressure

Beyond employment concerns, Americans are increasingly citing high prices and trade tariffs as factors fueling economic unease.

Rising Costs and Recession Fears

While consumer prices held steady from June to July, wholesale inflation unexpectedly spiked, signaling that tariffs on imports may soon drive consumer costs higher. The share of Americans who expect a recession within the next year rose in August to the highest level since April, when tariff measures began.

Shifts in Consumer Spending Plans

Despite concerns, certain areas of consumer spending showed resilience, while others weakened.

Auto Purchases Increase, Housing Steady

More respondents reported plans to purchase a car, while interest in buying a home remained unchanged following a decline in July.

Big-Ticket Items and Travel Decline

Intentions to buy appliances and other large household items fell, with variations depending on product type. Additionally, fewer Americans said they intend to take vacations, whether domestically or abroad, highlighting a more cautious spending approach.