Consumer Confidence Drops as 12-Month Inflation Outlook Rises

02:53 PM EDT, 08/26/2025 (MT Newswires) -- US consumer confidence fell in August, while 12-month inflation expectations rebounded following three straight months of easing, a report by the Conference Board showed Tuesday.

The consumer confidence index dropped 1.3 points sequentially to 97.4 this month. The consensus was for a 96.5 print in a Bloomberg survey.

"Consumer confidence dipped slightly in August but remained at a level similar to those of the past three months," said Stephanie Guichard, senior economist of global indicators at the Conference Board.

Consumers' average 12-month inflation outlook picked up following three consecutive months of easing, reaching 6.2% in August, according to Guichard.

"Consumers' write-in responses showed that references to tariffs increased somewhat and continued to be associated with concerns about higher prices," Guichard said. "Meanwhile, references to high prices and inflation, including food and groceries, rose again in August."

The present situation index decreased 1.6 points to 131.2 this month, while the expectations gauge dropped 1.2 points to 74.8, the data showed.

Although consumers' appraisal of current job availability fell for an eighth straight month, "stronger views of current business conditions mitigated the retreat" in the present situation measure, Guichard said.

"Pessimism about future job availability inched up and optimism about future income faded slightly," Guichard wrote. "However, these were partly offset by stronger expectations for future business conditions."

Last week, Federal Reserve Chair Jerome Powell indicated a potential monetary policy pivot to lower rates, saying that downside risks to employment were rising while the effects of tariffs on inflation will likely be short lived.

Markets are pricing in an 85% probability that the central bank will cut its benchmark lending rate by 25 basis points in September, according to the CME FedWatch tool. The remaining odds are in favor of another pause.

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