US consumer mood sours in August as retail sales unexpectedly slip

American consumer confidence took a notable hit in August, according to a preliminary reading from the University of Michigan's Surveys of Consumers. The Index of Consumer Sentiment dropped to 51 from July's final reading of 55.2, snapping a two-month streak of improvement and falling short of the 54.2 that analysts had expected. The index had previously touched a record low of 44.8 in May, a slide attributed to the Middle East conflict.

The survey's Current Economic Conditions Index also weakened, slipping to 51.8 in August from 54.8 in July and 61.7 a year earlier. The Index of Consumer Expectations followed suit, easing to 50.6 from 55.4 in July and 55.9 in August 2025.

Inflation expectations for the year ahead inched up to 4.3 percent from 4.2 percent in July, while long-run expectations held steady at 3.3 percent. The early-month decline was broad-based, with sharper drops among older consumers, lower-income households, and those without a college degree. Joanne Hsu, the survey's director, noted these groups are particularly exposed to any erosion of purchasing power from inflation.

Separately, the U.S. Census Bureau reported that retail sales fell 0.6 percent in July from the previous month, marking the first month-on-month decline in nine months and the steepest since May 2025. June had seen a 0.2 percent increase. The figures are seasonally adjusted but not inflation-adjusted.

Among categories, nonstore retailers saw a 2.2 percent drop, while motor vehicle and parts dealers fell 1.8 percent. Electronics and appliance stores declined 0.5 percent, and service station receipts slipped 0.9 percent despite lower gasoline prices during the period.