Donald Trump's tariff policy and concerns about inflation have dampened the economic sentiment of American consumers in August.
The University of Michigan reported on the 29th (local time) that the final consumer sentiment index for August, which shows consumer confidence in the economy, was recorded at 58.2. This reflects a decrease of 3.5 points from the previous month and is 0.4 points lower than the preliminary figure of 58.6 announced two weeks ago. The decline in the consumer sentiment index was observed across all demographics, irrespective of age, income, or stock ownership.
The University of Michigan consumer sentiment index has been on a downward trend since early this year due to uncertainty surrounding tariff policy, briefly stabilizing in May. It rebounded in June and July, supported by progress in trade negotiations and a stock market rally, but has since fallen again as concerns grew that the imposition of tariffs would lead to increased inflationary pressures.
Expectations for inflation over the next year rose from 4.5% in July to 4.8% in August. The long-term outlook, reflected by the 5-year expected inflation rate, remained stable at 3.4% to 3.5%. This is interpreted as a reflection of concerns that the Trump administration's tariff policy will continuously drive prices upward.
Joanne Hsu, director of the University of Michigan consumer sentiment index, said, "The decline in this month's consumer sentiment index has been observed broadly, regardless of class and asset level," adding that "consumers' perceptions of various institutional sectors in the economy have worsened." He also noted, "Due to concerns about high prices, conditions for purchasing durable goods have fallen to their lowest level in a year, and prospects for corporations and the labor market have also weakened."