The U.S. Consumer Confidence Index slightly increased in August, reaching 103.3, as reported by the Conference Board on August 27.  This marks a small rise of 1.4 from the previous month.

Both the Present Situation Index and the Expectations Index improved in August, indicating that consumers remain optimistic for business activity. However, recent increases in the unemployment rate have dampened consumer optimism regarding the labor market, leading to a more pessimistic outlook for future labor conditions.

While overall consumer confidence rose, confidence among those with incomes below $25K declined, whereas those with incomes above $100K showed the highest levels of confidence. This is consistent with the findings from the University of Michigan’s July consumer sentiment survey, which highlighted that lower-income individuals feel the impact of inflation more acutely, contributing to their decreased confidence in economic prospects.

Additionally, consumer expectations for the stock market have shifted, with more people now believing that stock prices will decline over the next year, likely reflecting concerns over the recent rise in unemployment. Interestingly, consumers have not altered their expectations regarding the likelihood of a potential economic recession.

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The University of Michigan released its Consumer Sentiment Index on August 16th, showing a preliminary reading of 67.8 for August, up slightly by 1.4 points from 66.4 in the previous month. The report indicates that with Kamala Harris replacing Joe Biden as the Democratic presidential nominee, confidence among Democratic supporters rose by 6%, while confidence among Republican supporters fell by 5%.

Regarding future economic developments, 41% of consumers believe that Harris would better support economic growth, while 38% favor Trump. Before Biden’s withdrawal, Trump had a 5-point lead over Biden in terms of economic development.

Overall, the dynamics of the presidential election seem to have a certain impact on consumers’ future expectations, as their outlook for personal finances and the economy over the next five years has reached its highest level in nearly four months.

Despite the increasing focus on the U.S. election, inflation remains the most important issue for consumers. One-year inflation expectations remain at 2.9%, unchanged from the previous month, and within the pre-pandemic range of 2.3% to 3.0%. Long-term inflation expectations have also remained steady at 3.0% for the past five months, slightly above the pre-pandemic range of 2.2% to 2.6%.