Consumer Sentiment Gauge Falls More Than Anticipated in August on Tariff Concerns

A monthly gauge of consumer sentiment fell more than expected in August from the month before as survey respondents indicated concerns about tariffs.

The University of Michigan’s flash consumer index, an indicator of the future course of the national economy, posted a 92.1 reading for the first half of the month, down from the 98.4 print at the end of July and below Econoday’s consensus for 97.5.

Richard Curtin, the chief economist at the university’s Surveys of Consumers, said respondents “strongly reacted” to announced tariff increases on Chinese imports that were to be levied at the start of September.

“Although the announced delay until Christmas postpones its negative impact on consumer prices,” Curtin said, “it still raises concerns about future price increases.”

Curtin said the Federal Reserve’s recent interest-rate cut raised consumer concerns about a recession. “Consumers concluded, following the Fed’s lead, that they may need to reduce spending in anticipation of a potential recession,” he said.

The current economic conditions index fell 3% from last month to 107.4 while the consumer expectations index dropped 9.1% to 82.3.

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