By Sarah Thompson New York, NY – August 26, Consumer confidence in the United States took a slight hit in August 2025, erasing modest gains from the previous month and resuming a downward trend that began earlier this year, according to the latest data from The Conference Board. The Consumer Confidence Index® fell by 1.3 points to 97.4, a figure that, while higher than economists’ expectations of 96.4, reflects growing unease driven by a weak jobs report, new tariffs, and political turbulence. This article delves into the factors behind the dip, its implications for the U.S. economy, and the broader sentiment shaping consumer behavior as reported across various sources and social media platforms like X.
The Numbers: A Closer Look
The Conference Board’s Consumer Confidence Index®, a key gauge of consumer attitudes toward current and future economic conditions, dropped from a revised 98.7 in July to 97.4 in August. The decline was driven by a 1.6-point drop in the Present Situation Index to 131.2, reflecting weaker perceptions of current business and labor market conditions, and a 1.2-point decrease in the Expectations Index to 74.8, which measures consumers’ short-term outlook for income, business, and jobs. Notably, the Expectations Index remains below the 80 threshold, a level historically associated with an impending recession, raising concerns about economic stability.
Specific metrics highlight the pessimism. Consumers’ appraisal of current job availability declined for the eighth consecutive month, with only 17.9% expecting more jobs to be available in the coming months, down from 18.0% in July. Optimism about future income also waned, with 18.3% of consumers expecting income increases (down from 18.7%) and 12.6% anticipating decreases (up from 11.8%). Meanwhile, 21.9% expected business conditions to worsen, a slight improvement from 22.7% in July, though offset by stronger expectations for future business conditions. Inflation expectations ticked up, with consumers projecting a 6.2% rate over the next 12 months, compared to 5.7% in July, reflecting concerns about tariff-driven price increases.
Driving Factors: Jobs, Tariffs, and Political Noise
The dip in consumer confidence comes on the heels of several economic and political developments. A weak jobs report released on August 1, 2025, by the U.S. Bureau of Labor Statistics revealed a sharp labor market cooldown, with job growth slowing significantly from 2024 levels. This was compounded by President Donald Trump’s sweeping new tariffs on nearly 70 countries, announced in early August, which sparked fears of price hikes despite a lower-than-expected inflation report showing a 2.7% rate, down from 3% in January. Write-in responses to The Conference Board’s survey highlighted growing consumer concerns about tariffs, with references to higher prices for food and groceries rising sharply.
Political turbulence also played a role. Hours before the confidence data was released, Trump moved to fire Federal Reserve Governor Lisa Cook, alleging mortgage fraud—a claim Cook refuted, asserting that Trump “has no authority” to remove her. The incident, coupled with Trump’s earlier dismissal of BLS Commissioner Erika McEntarfer for allegedly “faked” statistics, has fueled perceptions of economic instability. Federal Reserve Chair Jerome Powell, speaking last week, acknowledged a “challenging situation” as tariff-driven price pressures coincide with a hiring slowdown, hinting at a potential interest rate cut to balance the Fed’s dual mandate of maximizing employment and controlling inflation.
Economic Context: A Mixed Picture
Despite the confidence dip, the U.S. economy shows resilience in some areas. Consumer spending, which accounts for roughly two-thirds of economic activity, ticked higher over the three months ending in June 2025, and corporate earnings have remained robust. The overall inflation rate, at 2.7%, is below pre-inauguration levels, offering some relief. However, a recent GDP report indicated annualized growth of just 1.2% in the first half of 2025, down from 2.5% in 2024, signaling a slowdown. The Conference Board noted that consumers’ perceived likelihood of a recession over the next 12 months rose to its highest level since April, though it remains below 2023 peaks.
Demographic trends reveal varied impacts. Confidence fell among consumers under 35, remained stable for those aged 35–55, and rose for those over 55. By partisan affiliation, both Republicans and Democrats reported weaker confidence, while Independents showed little change. Consumers’ outlook on stock prices also deteriorated, with 47.4% expecting increases (down from 48.9%) and 30.3% anticipating declines (up from 28.1%). Interest rate expectations shifted, with 54.0% predicting rises (up from 53.1%) and fewer (20.9% vs. 21.4%) expecting cuts.
Consumer Behavior and Spending Plans
The confidence dip has mixed implications for consumer behavior. Purchasing plans for cars increased, with intentions to buy both new and used vehicles rising, while home-buying plans stabilized after a July decline. However, plans for big-ticket items like TVs and tablets saw declines, though demand for washers and dryers grew. These patterns suggest cautious optimism in some sectors, tempered by concerns about future income and job prospects. The Conference Board noted that consumers’ views of their family’s current and future financial situations improved slightly, offering a silver lining amid broader pessimism.
Social Media Sentiment and Broader Trends
On X, the consumer confidence data sparked varied reactions. @LizAnnSonders, posting on August 18, 2025, highlighted deteriorating buying conditions for vehicles, houses, and large household goods, citing University of Michigan data showing a sharper drop in sentiment to 58.6 points in August from 61.7 in July. @factpostnews reported that 58% of consumers plan to cut back spending due to inflation and unemployment fears, reflecting a broader unease. Meanwhile, @TheStalwart noted the University of Michigan’s preliminary August reading of 58.6, well below estimates of 62, with long-term inflation expectations rising to 3.9%, signaling stagflationary concerns.
These posts align with alternative data from the University of Michigan’s Consumer Sentiment Index, which paints a gloomier picture than The Conference Board’s findings. The Michigan index’s drop to crisis-level lows, comparable to the Great Recession and early 1980s, underscores a divide in consumer sentiment metrics, with Michigan’s survey capturing more acute pessimism. This discrepancy may reflect methodological differences, with The Conference Board’s online sample via Toluna contrasting with Michigan’s broader demographic reach.
Implications for the Economy
The slight decline in consumer confidence, while not catastrophic, signals challenges ahead. Consumer spending, a key driver of U.S. economic growth, could face headwinds if pessimism persists, particularly as tariffs threaten to raise costs for everyday goods. The Federal Reserve’s hinted interest rate cut could provide relief, but its cautious approach reflects the delicate balance between curbing inflation and supporting employment. Economists warn that prolonged confidence declines, especially if the Expectations Index remains below 80, could presage a recession, though the economy has so far avoided widespread job losses typical of downturns.
For businesses, the data suggests a need to adapt to cautious consumer behavior. Retailers may see stronger demand for essential goods like appliances but softer sales for discretionary items like electronics. The uptick in car-buying intentions offers hope for the automotive sector, though economic uncertainty could temper actual purchases. Policymakers, meanwhile, face pressure to address tariff-related concerns and stabilize labor market perceptions to restore confidence.
Looking Ahead
As The Conference Board prepares to release its next Consumer Confidence Index on September 30, 2025, all eyes will be on whether the downward trend continues or stabilizes. The interplay of tariffs, labor market dynamics, and Federal Reserve policy will shape consumer sentiment in the coming months. For now, the August dip serves as a reminder of the fragility of economic optimism in a politically charged environment. As one X user, @GlobalMktObserv, put it, “US consumer sentiment is at CRISIS levels… This is in line with Great Financial Crisis territory.” Whether this proves prophetic or overstated will depend on how policymakers and consumers navigate the challenges ahead.
Tags: consumer confidence, The Conference Board, economic outlook, tariffs, jobs report, Federal Reserve, inflation expectations, consumer spending, U.S. economy, recession fears
Sources:
- The Conference Board Consumer Confidence Index, August 2025
- ABC News: Consumer confidence worsened slightly in August
- MyCentralOregon.com: Consumer confidence worsened slightly in August
- ca.finance.yahoo.com: Consumer confidence worsened slightly in August
- University of Michigan Consumer Sentiment Index, August 2025