U.S. consumers grew more downbeat in August 2026 as the University of Michigan’s preliminary consumer sentiment index fell to 51.0, while July retail sales declined 0.6% month on month and earlier weak employment data added to signs of softer economic momentum. The Michigan survey had already shown only 8% of respondents expect their income to rise faster than inflation over the next year, down sharply from 18% in December 2024, with year-ahead inflation expectations edging up to 4.3% from 4.2%. Survey director Joanne Hsu said pessimism about purchasing power was the main driver, with older Americans, lower-income households and less-educated groups showing the deepest strain. The combination of weaker consumer and spending data has lowered market expectations for further near-term Federal Reserve tightening, and federal funds futures now imply about a 30% probability of a 25 basis point rate increase in September.