Strong Economy, Sour Mood: Why Consumers Aren’t Feeling the Boom
Jeanette Garretty
First Things
US Housing Starts and Building Permits for July, released on Tuesday, August 18
Minutes of the Fed/FOMC Interest Rate Meetings on July 29, released on Wednesday, August 19
Eurozone Inflation Rate for July, released Wednesday, August 19
What’s Not To Like?
Consumer inflation decelerated slightly in July, new jobless claims are running well below the levels of 2025, third quarter US economic growth is estimated at approximately 3.5% and average hourly earnings are growing 3.2%. Additionally, the S&P 500 hit a new market high last Thursday, August 13. One would think that all is good but . . . the consumer says otherwise. The day after that new S&P high, the preliminary Michigan Survey of Consumer Sentiment for August fell almost 8%, returning to the lower levels of consumer confidence that became evident in the spring of 2025.
Michigan Survey of Consumer Sentiment, August (preliminary)
The downbeat mood of US households, often described as “sour”, is nothing new. Nor has there been much change in the fact that consumer spending has remained robust through this extended period of depressed consumer sentiment numbers (Note: The Conference Board consumer sentiment survey also shows weakness.)
Potentially more notable than the once-again declining consumer confidence index is the evidence that the decline seems to now be showing up across political affiliations and income brackets. Also, the most recent Michigan survey (again, preliminary) signals that lower confidence exists for both current conditions and the longer-term outlook. Often, when economic or geo-political events are chaotic, but the labor market is relatively strong, consumers will indicate they are less confident in the future but relatively comfortable with their immediate present. The jarring differences between the top-line economic and financial market numbers and the consumer self-assessment of the state of their world will continue to raise questions as the US moves into the final quarter of 2026.
Weekly Commentary
Strong Economy, Sour Mood: Why Consumers Aren’t Feeling the Boom
Jeanette Garretty
First Things
What’s Not To Like?
Consumer inflation decelerated slightly in July, new jobless claims are running well below the levels of 2025, third quarter US economic growth is estimated at approximately 3.5% and average hourly earnings are growing 3.2%. Additionally, the S&P 500 hit a new market high last Thursday, August 13. One would think that all is good but . . . the consumer says otherwise. The day after that new S&P high, the preliminary Michigan Survey of Consumer Sentiment for August fell almost 8%, returning to the lower levels of consumer confidence that became evident in the spring of 2025.
Michigan Survey of Consumer Sentiment, August (preliminary)
The downbeat mood of US households, often described as “sour”, is nothing new. Nor has there been much change in the fact that consumer spending has remained robust through this extended period of depressed consumer sentiment numbers (Note: The Conference Board consumer sentiment survey also shows weakness.)
Potentially more notable than the once-again declining consumer confidence index is the evidence that the decline seems to now be showing up across political affiliations and income brackets. Also, the most recent Michigan survey (again, preliminary) signals that lower confidence exists for both current conditions and the longer-term outlook. Often, when economic or geo-political events are chaotic, but the labor market is relatively strong, consumers will indicate they are less confident in the future but relatively comfortable with their immediate present. The jarring differences between the top-line economic and financial market numbers and the consumer self-assessment of the state of their world will continue to raise questions as the US moves into the final quarter of 2026.
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