Consumer sentiment dips, especially among Republicans

Data: University of Michigan ; Note: August 2026 number is preliminary; Chart: Neil Irwin/Axios Public opinion about the economy appears to be souring further this month, per the preliminary release of the University of Michigan's consumer sentiment index.

By the numbers: Overall sentiment fell 8% in the early days of August, after two consecutive months of improvement.

The index fell to 51, from 55.2 in July.

That remains above the recent lows reached in the spring, when gasoline prices were soaring.

Inflation expectations were stable, with expected inflation over the next year ticking up to 4.3% and over the next five years unchanged at 3.3%.

The intrigue: The steepest month-to-month drop in sentiment was among survey respondents who identify as Republicans, with their outlook now 19% below readings from just before the Iran war and at the lowest since the 2024 election.

What they're saying: "Although the early-month weakening in sentiment was pervasive across various demographic groups, notably large reductions were seen among older consumers, lower-income consumers, and those without a college degree," said Joanne Hsu, director of the Michigan survey.

"These groups are all particularly vulnerable to any erosion of purchasing power stemming from inflation," she added.

"Across all consumers, only 8% expect their income growth to exceed inflation in the year ahead, down from 18% in December 2024, a reflection of the belief that high prices will continue to be burdensome."