U.S. consumer confidence declined in August to its lowest level since January, reflecting growing pessimism over the labor market and inflation, the Conference Board reported on Tuesday.
The Consumer Confidence Index dropped to 89.4 from a downwardly revised 90.2 in July, missing economists' forecasts of 90.2. The July figure was also revised lower from the initially reported 90.8, underscoring a broader trend of weakening household sentiment.
The decline was driven by a 7.8% slide in the Expectations Index, which measures consumers' short-term outlook for business conditions, employment and income. This outweighed the first improvement in four months in households' assessment of the current situation, a sub-index that had been under pressure since the spring.
Consumers' inflation expectations for the next 12 months rose to 5.8% in August, up from 5.6% in July, signaling growing concern over price stability. The labor market outlook also dimmed, with the Jobs Differential Index—tracking the gap between respondents who view jobs as plentiful versus scarce—rising for the first time in three months after hitting its lowest level in over five years in July.
Dana Peterson, chief economist at the Conference Board, noted that households grew more pessimistic about business conditions and the labor market over the next six months. The survey results suggest that rising inflation and labor market uncertainty are weighing on consumer sentiment, a key driver of U.S. economic activity.
The data, released by the New York-based research group, adds to signs that the Federal Reserve may face continued pressure to balance inflation control with economic growth as it assesses future policy moves.
