U.S. consumer confidence falls to a 7-month low with gas stuck above $4

WASHINGTON (AP) — Americans’ confidence in the economy declined again this month as the ongoing conflict in Iran continued to push U.S. gasoline prices above $4 per gallon.

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Americans remain frustrated with the economy after five years of elevated inflation, potentially posing a risk to President Donald Trump and Republicans in the midterm elections, which are less than 70 days away.

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That was the lowest level in seven months but was essentially within the same lukewarm range it has been in since the beginning of the year.

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In late 2024 and early 2025, readings were consistently above 100.

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Trump continues to blame high prices on his predecessor, Democrat Joe Biden, yet inflation has risen since Trump’s inauguration last year.

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The Federal Reserve’s preferred inflation gauge—the personal consumption expenditures price index—was up 3.7% in June from a year earlier.

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Comments about war and geopolitics, food prices, trade and jobs rose in August.

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That was down from May’s 4.1% year-over-year increase but up from 2.8% before the Iran war began on Feb. 28.

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It was 2.5% when Trump was inaugurated in January 2025.

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That was down from May’s 4.1% year-over-year increase but up from 2.8% before the Iran war began on Feb. 28.

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The U.S. job market stalled unexpectedly in July as employers cut 23,000 jobs.

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To make matters worse, Labor Department revisions erased 103,000 jobs from previously reported May and June payrolls.

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The unemployment rate fell to 4.1%, but for the wrong reason: Thousands of people dropped out of the labor market, leaving fewer people competing for work.

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The unemployment rate fell to 4.1%, but for the wrong reason: Thousands of people dropped out of the labor market, leaving fewer people competing for work.

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The report's so-called jobs differential index, measuring the gap between respondents who say jobs are plentiful versus those who say the are hard to find, rose for the first time in three months from a July reading that was the lowest in more than five years.

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Consumers saw inflation accelerating over the next 12 months to 5.8% from 5.6% in July.

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The report's so-called jobs differential index, measuring the gap between respondents who say jobs are plentiful versus those who say the are hard to find, rose for the first time in three months from a July reading that was the lowest in more than five years.

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The Conference Board said perceptions of employment conditions improved from the last reading, with the labor market differential - the share of consumers saying jobs are "plentiful" minus the share saying jobs are "hard to get" - rising to 7.5%.

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A separate reading of sentiment from the University of Michigan will be released Friday.

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The reading is expected to remain above the central bank's target, highlighting sustained inflation pressures to consumers.

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Economists watch this labor-market differential to gauge how tight labor conditions are for households.

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An indicator of present conditions rose to a four-month high, though a measure of expectations for the next six months fell to the lowest level since January.

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Recent data showed US retail sales fell in July by the most in more than a year as consumers pulled back after strong growth in the first half of 2026.

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The survey period for the report was August 3-16, a span that saw average pump prices hover above US$4 a gallon as renewed hostilities in the US-Iran conflict sent oil prices higher.

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Recent data showed US retail sales fell in July by the most in more than a year as consumers pulled back after strong growth in the first half of 2026.

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The US on Monday announced plans to increase economic pressure on Teheran, a move that could keep fuel costs elevated if supply concerns persist.

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The share of consumers who said jobs were plentiful rose, while the share saying jobs were hard to get fell.

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Looking ahead, however, consumers were more negative about future job and income prospects.

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The difference between the two – a metric closely followed by economists – matched the widest reading this year.

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“Anticipated spending on services pared back in August after a pop in most discretionary activities last month, as lower gas prices and the summer’s World Cup likely boosted consumer’s desire to spend in July,” the report said.

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They also were less optimistic about future business conditions, though the share of respondents saying they intend to take a vacation within the next six months rose to the highest level since January.

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“Anticipated spending on services pared back in August after a pop in most discretionary activities last month, as lower gas prices and the summer’s World Cup likely boosted consumer’s desire to spend in July,” the report said.

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Economists expect the report to show inflation-adjusted spending stalled last month.

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AAA on Tuesday showed the national average for a gallon of gas at $4.09, up from $3.16 a year ago.

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That's the second-lowest mark of the year so far and down from index readings of 97.8 and 105.6 in the last two Augusts, for comparison.

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And The Conference Board said confidence across all age groups trended down slightly in August, with confidence for consumers under 35 remaining the highest.

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Confidence among independents and Republicans “softened,” The Conference Board said.

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Democrats were somewhat more positive, the group said.

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Meanwhile, another well-known tracker of how consumers feel remained near a record low when it was last updated earlier this month.

The University of Michigan’s consumer sentiment index hit an all-time low in May, showed improvement across June and July, and then hit another downturn this month.

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Inflation, 3.4% at last check, is still above the Federal Reserve’s target.

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Food costs 33% more than it did before the pandemic hit six years ago.

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The Conference Board – a nonpartisan, nonprofit think tank and business membership organization – takes both present-day and forward-looking sentiment into account when calculating its consumer confidence index.

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Twenty-seven percent of consumers said jobs were plentiful, up from 24.4% in July, while 19.5% said jobs were hard to get, down from 21.7%.

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Employment drove much of the improvement in current conditions.

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Only 14.6% expected more jobs, down from 16.4%, while 26.1% expected fewer.

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The share expecting their income to rise declined to 17.6% from 19.5%, although income expectations remained positive overall.

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The August PCEI slipped 0.8 points to 54.8 and has remained within a relatively narrow 53-to-57 range for 11 months.

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The share expecting their income to rise declined to 17.6% from 19.5%, although income expectations remained positive overall.

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Nine of its 11 measures declined in August.

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Personal job security was the exception, increasing to 80.6, though it remained 5 points below its spring peak.

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Consumers who don’t live paycheck to paycheck have been moving higher, paycheck-to-paycheck consumers who don’t struggle with bills occupy the middle and have been gradually losing ground, while consumers struggling paycheck to paycheck have remained below the index’s neutral reading throughout the series.

The gap between the top and bottom groups is now 2.2 points wider than it was last October.

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PYMNTS’ E-shaped economy tracks three groups by financial lifestyle.

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Consumers struggling paycheck to paycheck posted the largest improvement in personal job security, a 4.3-point increase.

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Yet their scores for current household finances, debt manageability and buying conditions all declined during the same month.

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Nineteen percent of respondents said their financial lifestyle had worsened compared with 12 months earlier, versus 7.1% saying it had improved.

The report says roughly 7 in 10 remained in the same financial lifestyle.

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Among households whose financial lifestyle declined, 33% reported falling household income, compared with 21% whose lifestyle held steady.

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A large, unexpected expense was reported by 36% of the declining group versus 23% of those who held steady.

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Twenty-six percent of households reporting deterioration said they could cover more than three months of expenses from savings, compared with 46% whose financial lifestyle held steady and 62% whose situation improved.

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Among households facing an unexpected expense of at least $1,200, 56% of consumers who weren’t living paycheck to paycheck paid their largest expense with cash, checking or savings, compared with 36% of struggling paycheck-to-paycheck consumers.

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August was the first fielding of the retrospective financial-lifestyle questions, and PYMNTS says the results rely on respondents’ recollection and are best treated as a snapshot rather than a longitudinal trend.

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The struggling group was also more likely to carry a credit card balance over time, 35% versus 16%, and use BNPL, 15% versus 3.5%.

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Restaurants, bars and takeout; utilities; and streaming, internet and mobile services ranked among the leading categories.

But planned spending weakened for movies, personal-travel hotels, airfare, amusement parks and museums, and intentions for most durable goods moderated slightly.

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But planned spending weakened for movies, personal-travel hotels, airfare, amusement parks and museums, and intentions for most durable goods moderated slightly.

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