Level 1 — Absolute Beginner
Every month, researchers ask Americans how they feel about money and the future.
This month, people feel worse than last month. A number that shows this feeling dropped a lot.
People are worried about a war far away and about prices going up.
Older people and people with less money feel the most worried.
- confidence
- a feeling of trust or belief that things will be good
- researcher
- a person who studies something carefully to learn facts
- drop
- to become lower or smaller
- worried
- feeling nervous or afraid about something
- prices
- the amount of money something costs
- war
- fighting between countries or groups
- future
- the time that has not happened yet
- survey
- a set of questions asked to many people to learn their opinions
Level 2 — Elementary
A well-known survey that measures how Americans feel about the economy showed a sharp drop this month, ending two months of improvement.
The University of Michigan's Consumer Sentiment Index fell to 51.0 in August, down from 55.2 in July, and lower than experts had expected.
People's expectations for future business conditions dropped sharply. At the same time, Americans said they expect prices to keep rising faster than they did just a few months ago, largely because of worries linked to the ongoing conflict in the Middle East.
The drop in confidence was felt by people across the political spectrum, but it was steepest among older Americans, people with lower incomes, and those without a college degree.
- index
- a number used to track changes in something over time
- expectation
- a belief about what will happen in the future
- economy
- the system of money, jobs, and business in a country
- conflict
- a serious disagreement or fight
- spectrum
- a full range of different positions or opinions
- income
- the money a person earns
- steep
- changing quickly and by a large amount
- sharp
- sudden and noticeable
Level 3 — Intermediate
The University of Michigan's preliminary Index of Consumer Sentiment for August came in at 51.0, well below the consensus forecast of 54.5 and down sharply from July's final reading of 55.2, snapping two consecutive months of improvement.
The decline was broad-based, but expectations for future business conditions fell especially hard, dropping 11 percent for the short run and 17 percent for the long run. Meanwhile, year-ahead inflation expectations climbed to 4.3 percent, up from 4.2 percent in July and well above the 3.4 percent recorded in February, just before the Iran conflict began.
Survey researchers attributed much of the pessimism to inflation worries connected to the ongoing Middle East conflict, which has disrupted oil shipments and pushed up energy costs. Views of personal finances changed only modestly, suggesting the anxiety centers more on the broader economic outlook than on households' immediate circumstances.
The decline in sentiment cut across the political spectrum, though it was most pronounced among Republicans, whose confidence fell 19 percent below levels recorded just before the conflict erupted and hit its lowest point since the 2024 election. Notably large declines were also recorded among older consumers, lower-income households, and those without a college degree.
- preliminary
- an early version of a result, before it is finalized
- consensus forecast
- the average prediction shared by a group of experts
- snap
- to bring a streak or pattern to a sudden end
- broad-based
- affecting many different groups or areas at once
- pessimism
- a tendency to expect bad outcomes
- outlook
- a general view of how the future is expected to be
- modestly
- in a small or limited way
- pronounced
- very noticeable or clearly marked
Level 4 — Advanced
The University of Michigan's preliminary Index of Consumer Sentiment registered 51.0 in August, undershooting the consensus forecast of 54.5 and retreating sharply from July's finalized reading of 55.2, thereby snapping two consecutive months of incremental improvement in household sentiment.
The deterioration was broad-based but concentrated disproportionately in forward-looking metrics: expectations for near-term business conditions sank 11 percent, while long-run expectations tumbled 17 percent. Year-ahead inflation expectations, meanwhile, climbed to 4.3 percent from July's 4.2 percent, a marked escalation from the 3.4 percent reading recorded in February, immediately preceding the outbreak of the Iran conflict.
Survey economists attributed the bulk of the pessimism to inflationary anxieties stemming from the ongoing Middle East conflict, which has disrupted oil shipments through the Strait of Hormuz and exerted sustained upward pressure on energy costs. Notably, assessments of personal financial circumstances shifted only marginally, suggesting the deterioration in sentiment is concentrated in households' macroeconomic outlook rather than their immediate material conditions.
The erosion in confidence spanned the political spectrum but was most acute among Republicans, whose sentiment readings fell 19 percent below pre-conflict levels and touched their lowest point since the 2024 election, a reversal survey researchers characterized as unusually steep given Republicans' historically more optimistic economic outlook. Disproportionately large declines were likewise recorded among older consumers, lower-income households, and those lacking a college degree, populations typically more exposed to energy and grocery price volatility.
- undershoot
- to fall short of an expected or targeted level
- deterioration
- a gradual worsening of a condition
- forward-looking
- concerned with expectations about the future rather than the present
- escalation
- a rapid increase in the intensity or level of something
- inflationary
- related to a general rise in prices
- marginally
- to a very small degree
- erosion
- a gradual decline or wearing away of something
- volatility
- a tendency to change quickly and unpredictably
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