Job Prospects and Inflation Weigh on Consumer Confidence

Consumer confidence slipped in August, as individuals said inflation is likely to surge, while job prospects dimmed and spending plans were, at best, mixed.

The Conference Board’s Consumer Confidence Index edged down by 1.3 points to 97.4 from a revised 98.7 in July, according to a Tuesday (Aug. 26) press release.

The Present Situation Index declined by 1.6 points to 131.2, while the Expectations Index slipped by 1.2 points to 74.8. The Expectations Index remained below the threshold of 80, which typically signals recession risks.

Confidence fell among consumers younger than 35 years old, remained stable for those aged 35 to 55, and rose for those over 55. Results were mixed across income groups, with no clear trend, the release said.

Inflation expectations rose for the first time in three months, climbing to 6.2% from 5.7% in July, but below April’s peak of 7%, according to the release. Concerns about tariffs and high prices, especially for food and groceries, intensified. Job-related mentions also rose, although they remained a smaller share of consumers’ write-in responses.

The PYMNTS Intelligence report “Stock Out. The Impact of Tariffs on Consumer Product Prices and Availability” underscored the fact that the impact of tariffs has indeed been felt by the paycheck-to-paycheck economy. The report found that 47% of shoppers in the United States said they could not find or afford everyday items because tariffs led to supply chain disruptions or higher price tags. Thirty percent of U.S. consumers have been explicitly told by businesses where they shop that tariffs have driven up prices. Nearly another 1 in 4 has seen merchants refer to “increased costs,” without specifically blaming tariffs.

• The Conference Board found that 22% of consumers said business conditions were “good” (up from 20.5% in July), while 14.2% said they were “bad” (up from 13.6% in July). Views of the labor market weakened, with 29.7% of consumers saying jobs were “plentiful” (down from 29.9% in July) and 20% saying jobs were “hard to get” (up from 18.9% in July).
• Per the release, 19.5% of consumers expect business conditions to improve (versus 19% in July), while 21.9% expect them to worsen (versus 22.7% in July). Expectations for job availability deteriorated, with 26.8% anticipating fewer jobs ahead (up from 25.1% in July). Income prospects softened, with only 18.3% expecting increases (down from 18.7% in July).

Consumers’ assessments of their current and expected family financial situations strengthened slightly. However, the share of respondents expecting a recession in the next 12 months rose to the highest level since April, the release said.

Buying intentions shifted in August:

• Cars: Increased, with both new and used vehicles seeing stronger demand.
• Homes: Stable after July’s decline.
• Big-ticket items: Mixed, as appliance intentions rose (notably washers and dryers), while electronics (TVs and tablets) fell.
• Services: Plans to spend more on non-discretionary services (financial services, car/home maintenance) improved, but discretionary categories like dining out and entertainment weakened.
• Vacations: Declined for the second consecutive month, both domestically and abroad.

Overall, August results point to a state of confidence that could best be described as fragile. Rising inflation expectations and heightened concerns about tariffs and prices remain key risks to consumer spending heading into the fall as merchants gear up for the all-important holiday shopping season.

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