American consumers are sending mixed signals about the economy as summer draws to a close, with fresh data showing confidence wavering amid persistent concerns over jobs, income, and inflation. According to figures released by the Conference Board on August 26, 2025, the U.S. Consumer Confidence Index dipped slightly to 97.4 in August from a revised 98.7 in July. While the drop was modest—just 1.3 points—it marks the eighth consecutive month that worries about the labor market have weighed on sentiment.
Behind the headline number, the details paint a more nuanced picture of how Americans are feeling about their financial prospects. The Present Situation Index, which measures consumers’ assessment of current business and labor market conditions, slipped to 131.2 in August from 132.8 the month before. This decline was echoed in the Expectations Index, a gauge of short-term outlook for income, business conditions, and employment, which fell by 1.2 points to 74.8. Notably, this figure remains well below the threshold of 80 that many economists view as a warning sign of a potential recession.
"Notably, consumers’ appraisal of current job availability declined for the eighth consecutive month, but stronger views of current business conditions mitigated the retreat in the Present Situation Index," noted Stephanie Guichard, senior economist for global indicators at the Conference Board, in the group’s press release. The labor market remains a central worry for many Americans, even as unemployment and layoffs are still historically low. July saw U.S. employers add just 73,000 jobs—far fewer than the 115,000 economists had forecast. Revisions to May and June payrolls erased another 258,000 jobs, and the unemployment rate ticked up from 4.1% to 4.2%.
Government data from June underscored the softening labor market, with job openings falling to 7.4 million from 7.7 million in May. The number of workers quitting their jobs—a sign of confidence in landing new opportunities—also declined. These trends are making many Americans more cautious about spending, especially in sectors like retail and hospitality that are more vulnerable to economic swings. As reported by AInvest, "Consumers are increasingly apprehensive about job security and financial stability, leading to cautious spending."
Age appears to play a role in how Americans are experiencing the current economic moment. The Conference Board survey found that confidence fell for consumers under 35, remained stable for those aged 35 to 55, and actually rose for people over 55. Pessimism about future job availability increased, while optimism about future income faded slightly. These shifts are mirrored in the University of Michigan’s index of consumer sentiment, which dipped 5% from July to August. Joanne Hsu, director of Surveys of Consumers at the University of Michigan, commented, "Overall, consumers are no longer bracing for the worst-case scenario for the economy feared in April when reciprocal tariffs were announced and then paused. However, consumers continue to expect both inflation and unemployment to deteriorate in the future."
Inflation continues to loom large in the minds of consumers. After three months of easing fears, the Conference Board found that average 12-month inflation expectations rose to 6.2% in August, up from 5.7% in July—though still below April’s 7.0% peak. References to tariffs in survey responses increased, with many associating them with higher prices. The producer price index, which tracks wholesale costs before they reach consumers, jumped 0.9% in July, suggesting that businesses could soon pass those costs on to households.
"Consumers’ write-in responses showed that references to tariffs increased somewhat and continued to be associated with concerns about higher prices," explained Guichard. These inflationary pressures, combined with stagnant wage growth, are eroding purchasing power for many families. As AInvest highlighted, "The combination of rising prices and stagnant wages is creating a challenging environment for many households, further contributing to the decline in consumer confidence."
The impact on consumer behavior is already visible. While plans to purchase homes remained stable in August after declining in July, intentions to buy new and used cars actually rose. However, discretionary spending on activities like dining out, entertainment, and travel softened, with vacation plans falling for a second consecutive month. This cautious approach to spending could have broader implications for economic growth, since consumer spending accounts for a significant portion of the U.S. economy.
Despite these headwinds, there are some silver linings. The Conference Board noted that consumer confidence has effectively plateaued at recent levels, and optimism about future business conditions improved modestly. Still, the overall tone remains cautious. The share of Americans expecting a recession within the next year rose in August to the highest level since April, when tariff measures were first rolled out. Financial markets reacted nervously to the latest data, especially after the release of disappointing job numbers and the subsequent dismissal of Erika McEntarfer, the head of the Bureau of Labor Statistics, by President Donald Trump.
Economists warn that if these trends persist, the risk of a self-reinforcing cycle increases. Reduced consumer spending can lead to a slowdown in economic growth, prompting businesses to scale back investment and hiring. This, in turn, could result in further job losses and income reductions, deepening the very anxieties that are already weighing on consumers. "Reduced consumer spending could slow economic growth and lead to decreased business investment and hiring," AInvest cautioned.
Looking ahead, policymakers and economists are closely watching upcoming data releases, including August’s hiring figures and June’s job openings report. Many argue that targeted policy measures—such as initiatives to boost job creation, support wage growth, and control inflation—are needed to shore up consumer confidence and keep the economic recovery on track. "The decline in consumer confidence signals a need for targeted policy measures to boost job creation, increase wages, and control inflation," according to AInvest.
For now, the American consumer remains wary, caught between the reality of a labor market that is losing steam and the ever-present threat of rising prices. With the economic outlook uncertain and recession fears on the rise, the next few months will be critical in determining whether confidence can be restored—or if the mood of caution will harden into something more lasting.
