According to the University of Michigan survey, only 8% of American consumers believe their income will grow faster than inflation over the next twelve months, down from 18% in December 2024. The Consumer Sentiment Index fell to 51.0 in August 2026, down 7.6% from July. Year-ahead inflation expectations edged higher from 4.2% to 4.3%. Lower-income households, older Americans, and less-educated demographics are bearing the brunt of this downturn. This erosion of purchasing power could weigh on consumer spending, which accounts for roughly two-thirds of US GDP.
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