The Conference Board’s consumer confidence survey measures the average American’s mood on the economy monthly, and its latest report for August suggests many Americans aren’t feeling too good despite the stock market’s massive 30% rally since April 8.
Respondents to the survey offered a stark outlook on the economy, citing inflation and job concerns, and worrisome views on what could happen to the U.S. economy next.
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The downbeat data contrasts sharply with what many investors are likely feeling, given that the Dow Jones Industrial Average and the benchmark S&P 500 index—commonly owned by investors in workers’ retirement accounts—posted all-time highs this week.
The results could be a harbinger of tougher times ahead, but they may also send another signal to the Federal Reserve that interest rates should be lowered in September.
Plenty of economic uncertainty exists
- The unemployment rate has risen to 4.2% in July from 3.4% in 2023.
- Layoffs were up 140% year-to-year in June.
- Open, unfilled jobs have declined by 3.8 million since June 2022.
- Consumer Price Index inflation has risen since April 2025.
The Conference Board’s Consumer Confidence index slipped 1.3 points to 97.4 in August, and the Present Situation Index, which tracks business conditions and the job market, fell 1.6 points to 131.2.
Related: Bank of America rings inflation alarm ahead of PCE report this week
Consumers saying jobs are “hard to get” increased to 20% from 18.9% in July.
The Conference Board; NBER, The Conference Board.
That makes sense given that the July Bureau of Labor Statistics jobs report showed unemployment at 4.248%, up from 4.117% in June and above 4.2443% in May.
The BLS report also included sharp downward revisions to previously reported jobs created in May and June, reducing the number by 258,000 to 33,000. Only 73,000 jobs were added to the U.S. economy in July, below Wall Street estimates for 100,000 jobs.
That jibes with a rise in layoffs. Challenger, Gray & Christmas reports companies laid-off 62,075 workers in July, up 29% from June and 140% from one year ago. According to the Job Openings and Labor Turnover Survey (JOLTS), 7.4 million unfilled jobs existed in June, down from 7.7 million in May and 11.3 million in June 2022.
Perhaps unsurprisingly, Americans are extrapolating the current slowdown in the job market into the future.
The Expectations Index measures sentiment for the coming six months, and it slipped 1.2 points to 74.8. The Conference Board wrote that readings below 80 “typically signal a recession ahead.”
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“The present situation and the expectation components both weakened,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “Notably, consumers’ appraisal of current job availability declined for the eighth consecutive month.”
The drop in optimism was most evident among consumers under 35. Optimism actually increased among those aged 55 and up.
Overall, inflation worries resurfaced, with 12-month forecasts rising to 6.2% from 5.7% in July after falling in the prior three months.
In July, Consumer Price Index inflation was up 2.7% year over year, up from a low of 2.3% in April before many newly enacted tariffs were implemented.
Falling confidence could mean the Fed cuts interest rates soon
Confidence among consumers is an important measure of the economy because economic activity tends to increase when consumers are optimistic and decrease when they’re feeling pessimistic.
Related: Morgan Stanley makes major change to Fed interest rate cut forecast
As a result, confidence is one of many inputs considered by Federal Reserve officials tasked with setting interest rates. The Fed’s dual mandate is to set rates at levels that encourage low unemployment and inflation, requiring members to weigh various data that may influence household and corporate spending.
Lower consumer confidence alone will not result in the Fed changing its policy. However, the timing of the latest confidence data supports mainstream thinking that the Fed will reduce rates by 0.25% at its next meeting on Sept. 17.
“It is imperative that the Fed cuts key interest rates and continues to cut in the upcoming months to bolster consumer sentiment and avoid a recession,” said long-time Wall Street money manager Louis Navellier.
After reducing its Fed Funds Rate, the rate banks charge each other on overnight loans of reserves, by 1% at the end of 2024, the Fed left interest rates unchanged in 2025 over fear that tariffs would rekindle inflation.
However, weaker jobs data may increasingly tilt monetary policy toward the unemployment leg of its dual mandate. According to the CME’s FedWatch tool, the odds of the Fed lowering rates in September are 87%, up from 62% one month ago.
Related: Fed official sends dire warning on US economy