Declines in consumer sentiment were seen across the political spectrum, with Republicans posting the biggest monthly decline, according to the survey. Republican sentiment is down 19% from before the conflict with Iran kicked off earlier this year.

“Although the early-month weakening in sentiment was pervasive across various demographic groups, notably large reductions were seen among older consumers, lower-income consumers, and those without a college degree,” said Joanne Hsu, the survey director.

“These groups are all particularly vulnerable to any erosion of purchasing power stemming from inflation,” she added. “Across all consumers, only 8% expect their income growth to exceed inflation in the year ahead, down from 18% in December 2024, a reflection of the belief that high prices will continue to be burdensome.”

Year-ahead inflation expectations ticked from 4.2% last month to 4.3% in August. That is an increase from the 3.4% level measured before the war with Iran kicked off.

Meanwhile, for the third month in a row, long-run inflation expectations remained at 3.3% in August.

The lower sentiment readings come as the country continues to experience years of too-high inflation.

CPI inflation fell one-tenth of a percentage point in July to 3.4%, and last month alone it only rose 0.1%. Inflation, as measured by the PPI, fell eight-tenths of a percentage point to 4.7% for the year ending in July — more than expected.

Despite recent declines, inflation remains well above the Federal Reserve’s 2% target, and consumers are feeling the pain of years of cumulative inflation.

SOFTER INFLATION REPORTS MAY PUSH BACK RATE HIKE

The labor market is also feeling a bit of a slowdown in recent weeks.

The government reported that the economy lost 23,000 jobs in July, a major surprise to the downside.