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- Consumer sentiment falls for first time in 4 months as inflation expectations surge</p>
<p>Emma OckermanAugust 16, 2025 at 12:38 AM</p>
<p>Consumer sentiment soured in August for the first time in four months as Americans grew antsy about where inflation is headed.</p>
<p>The latest University of Michigan consumer survey released Friday showed year-ahead inflation expectations soared to 4.9% in August from 4.5% in July. That pessimism was seen across demographic groups and political affiliations. Overall, sentiment dropped 5% month over month, the survey showed.</p>
<p>On an annual basis, inflation has held at 3% or lower so far this year, though core inflation stripping out more volatile food and energy prices rose 0.3% between June and July, the largest gain in six months. Hotter-than-expected wholesale inflation data released this week suggested consumers may face more pricing pressure in the months to come.</p>
<p>Learn more: July CPI breakdown: Consumers are feeling the crunch of accelerating inflation</p>
<p>Still, "consumers are no longer bracing for the worst-case scenario for the economy feared in April when reciprocal tariffs were announced and then paused," said Joanne Hsu, the survey director, in a statement. (High country-specific tariffs took effect last week.)</p>
<p>Consumers in the survey also expect the job market to weaken, following what is now a three-month streak of disappointing jobs numbers. Though the unemployment rate has been hovering between 4% and 4.2% since May 2024, the US economy added 73,000 nonfarm payrolls in July, less than the 104,000 expected by economists. Meanwhile, May and June jobs figures were revised sharply downward to a total gain of just 33,000 jobs.</p>
<p>"The share of consumers expecting unemployment to worsen in the year ahead was about 32% in 2022 and as recently as November 2024, but is now about 60%, a reading last seen in the Great Recession," Hsu wrote in a report that was also released Friday.</p>
<p>But tariff worries and recession talks aside, consumers are still getting out their credit cards: Retail sales in July were up 0.5% from the month prior.</p>
<p>Read more: What is inflation, and how does it affect you?</p>
<p>Emma Ockerman is a reporter covering the economy and labor for Yahoo Finance. You can reach her at [email protected].</p>
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