Consumer sentiment falls by nearly 8% in August

THOUSAND PALMS, Calif. (KESQ) — Inflation remains persistent, leading the 30-year Treasury yield to reach a 19-year high of 5.33%.

Amid inflation concerns, consumer sentiment fell nearly 8% in August, wiping out the gains from the past two months.

The decline in sentiment was pervasive across a wide range of demographics but was notably greater among older consumers, low-income earners and those without a college degree, according to the University of Michigan’s Survey of Consumers.

In 2026, the index of consumer sentiment has fallen to a quarterly reading of 48 — its lowest point since the University of Michigan began its Survey of Consumers in 1978. Furthermore, the personal finance rating of 63 is only three points above the 60 rating reported in 2008 during the subprime mortgage crisis.

The low sentiment comes alongside rising financial pressure on households, according to federal data. A Federal Reserve survey found that 23% of renters were behind on rent in 2026, representing a 6-percentage-point increase over five years, while total credit card debt reached $1.28 trillion after growing nearly 50% during the same timeframe.

Many residents report making significant lifestyle adjustments to cope with living expenses. Phyllis Levine, a retired resident of Palm Desert, said her fixed income has not kept pace with costs.

“I live alone and I live on my Social Security and I have a small pension from when I worked, but not enough,” Levine said before addressing the ongoing costs and expressing concern for future generations.

“I don't know why they keep going up… I don't think in my time that it's going to go down, but I hope for my family that it does,” Levine said.

Despite consumer concerns, some economic analysts say public sentiment does not reflect macroeconomic indicators. Chris Thornberg, a founding partner of Beacon Economics, said economic metrics do not explain the low sentiment levels.

“There is no economic information that would back up this incredibly low consumer sentiment,” Thornberg said.

Addressing public perceptions regarding household income, Thornberg said overall wage data shows growth relative to general inflation.

“So to the people who, who son't necessarily think wages have kept up with the, the prices of everyday goods: gas, groceries," News Channel 3's Matthew Pearce asked.

"You're wrong,” Thornberg interjected. “The data is abundantly clear that wages, earnings, household income have all risen faster than the rate of inflation over the last five years.”

Data from the Bureau of Labor Statistics shows a nuanced picture when comparing earnings to specific consumer goods over the past five years. Average hourly earnings rose approximately 23% over the five-year period, yielding about 0.7% in real wage growth above overall consumer prices. However, prices for specific household necessities grew faster than hourly wages, with gasoline prices rising about 27% and grocery prices increasing about 24% over the same period.

Thornberg also discussed monetary mechanisms and how inflation pressures interact with policy decisions.

“You expand the money supply,” Thornberg said. “You increase inflation pressures. It's as simple as that. So thats how they'll inflate their way out of it.”