Concerns over higher prices led a U.S. consumer sentiment index surprisingly down during July, and even lower in early August. The University of Michigan’s preliminary sentiment index fell from 85.5 in June to 80.8 in July, and to 70.2 during the first half of August, weighted down by higher costs and fears of the Delta variant.
In the past 50 years, there have been only two larger declines in the index—the depths of the 2007-2009 recession and at the beginning of the pandemic in April 2020.
Inflation expectations of 4.8% over the next year are at the highest level since August 2008, and consumer complaints about rising prices, vehicles and household durables reached an all-time high. And what may be a turning point for the U.S. housing industry—as prices continue to surge—buying attitudes for homes dropped to their lowest point since 1982, as just 30% of consumers think it is a favorable time to buy a new home.
Created in the 1940s and considered a leading indicator, the University of Michigan conducts the monthly survey of consumer confidence levels by telephone interviews that gather information on consumer expectations for the economy.