The University of Michigan’s preliminary consumer sentiment index fell to 51.0 in early August 2026 from 55.2 in July, below the 54.5 Reuters poll forecast and marking the first decline in three months, while retail sales also posted a sharp July drop. The deterioration was broad across demographic groups and reflected rising cost-of-living pressure from gasoline prices above $4 a gallon, negative real wage growth and elevated inflation expectations during the U.S.-Iran war. Current conditions fell to 51.8 from 54.8, expectations dropped to 50.6 from 55.4, one-year inflation expectations edged up to 4.3% from 4.2%, and long-term expectations held at 3.3%, reinforcing concerns that households are becoming more cautious on spending and reducing the case for near-term Federal Reserve tightening.