Consumer confidence in the US fell for the first time in three months in August, and one-year inflation expectations rose to 4.3%

The Zhitong Finance App learned that consumer confidence in the US declined for the first time in three months in August. As household concerns about the deteriorating business environment and rising prices intensified, consumers' views on the short-term and long-term prospects of the US economy weakened.

According to preliminary data released by the University of Michigan on Friday, the consumer confidence index fell to 51 in August, lower than the final value of 55.2 in July, and clearly below the 55 expected by economists surveyed by the media.

The survey showed that US consumers' concerns about inflation are heating up. The interviewees expect prices to rise 4.3% in the next year, a slight increase from the previous month, and significantly higher than the level before the outbreak of the Iranian conflict in February this year. The average annual inflation forecast for the next 5 to 10 years is 3.3%.

Joanne Hsu, head of consumer research at the University of Michigan, said that the decline in consumer confidence in early August was widespread among various population groups. Among them, the decline was particularly evident among elderly consumers, low-income groups, and consumers without a college degree. These groups are more vulnerable to inflation eroding their purchasing power.

Meanwhile, consumer confidence in both short- and long-term economic prospects deteriorated, reversing the previous two consecutive months of improvement. In contrast, consumers' expectations of the job market have not changed much since the beginning of the year. According to the survey, household concerns about inflation are currently increasing, while concerns about unemployment are relatively weak.

The survey covered July 28 to August 10, and the average gasoline price in the US remained above $4 per gallon during this period. Higher energy prices have further increased the pressure on household living costs.

According to another data released on the same day, retail sales in the US recorded the biggest drop in more than a year in July, which was mainly dragged down by a decrease in automobile and online shopping expenses. It shows that against the backdrop of high prices and weak revenue growth, consumers began to cut back some of their expenses.

American residents are currently facing the double pressure of rising prices and weak wage growth. Government data released earlier this week showed that the actual average hourly wage in July fell 0.2% year on year, continuing the weak performance since the outbreak of the war in Iran in February this year.

Consumer spending has always been an important force supporting US economic growth, so falling confidence, weak real wages, and weakening retail sales may further raise market concerns about cooling consumption momentum. At the same time, one-year inflation expectations have rebounded to 4.3%, which also means that the policy trade-off faced by the Federal Reserve between economic growth and inflation risks is still complicated.