The U.S. middle class has begun showing sharply pessimistic views on the economy in August, according to a Wall Street Journal (WSJ) report on August 31. The deterioration in overall U.S. consumer sentiment has already been confirmed in major sentiment indicators that markets closely watch. The University of Michigan's Consumer Sentiment Index, which rose in June and July, fell 5.7% to 58.2 in August compared to the previous month.

This is 0.4 points lower than the preliminary reading of 58.6 announced two weeks ago. In particular, this decline appeared across all groups, regardless of age, income, or stock ownership levels, raising concerns about the future U.S. economic outlook. The index had continued a downward trend early this year due to uncertainty over the Trump administration's tariff policies, stabilized in May, and rebounded in June and July thanks to progress in trade negotiations and a stock market rally.

However, it is interpreted that consumer sentiment has fallen again amid expectations that tariff impositions will lead to inflationary pressures. A survey compiled by the economic research group Conference Board also showed that the Consumer Confidence Index fell by 1.3 points in August compared to the previous month. The WSJ analyzed that the retreat in economic optimism seen in August was mainly due to the worsening economic sentiment among the middle class. Households with annual incomes below $50,000 have already seen deteriorating economic sentiment this year, while those with incomes above $100,000 continue to maintain optimism.

In this context, sentiment among households in the $50,000 to $100,000 income bracket has deteriorated sharply in recent months. According to daily Consumer Sentiment Index data from market research firm Morning Consult cited by the WSJ, changes in sentiment indices for households with annual incomes above $100,000 and below $50,000 were not significant in August. In contrast, only the $50,000 to $100,000 income group saw a decline of more than 4%. Compared to the June peak, the drop exceeds 10%. John Leer, chief economist at Morning Consult, evaluated, “There was a period when middle-class consumers' sentiment temporarily improved as everything seemed to be going well, but it has now deteriorated sharply.” Retail executives and economic experts are also expressing concerns about the recent sharp deterioration in middle-class sentiment.

Raphael Bostic, president of the Atlanta Federal Reserve Bank, recently stated in a public forum, “Not only low-income groups but even middle-income groups currently have no spare money.” McDonald's, in a recent earnings conference call, mentioned that while low-income customers are decreasing, visits from middle-class consumers are increasing, and this trend is expected to continue. Andrew Rees, CEO of shoe brand Crocs, also said in a recent earnings conference call, “Brands focused on high-end products are performing well. On the other hand, low-end product consumers are very sensitive to price increases, worried about the economic situation, and some are staying home altogether.”

Meanwhile, the University of Michigan survey showed that expected inflation over the next year rose from 4.5% in July to 4.8% in August. The 5-year expected inflation, which reflects consumers' long-term inflation outlook, remained stable, rising from 3.4% in July to 3.5% in August. This appears to reflect consumers' concerns that the Trump administration's tariff policies will continue to push up prices. Joanne Hsu, director of the University of Michigan Consumer Sentiment Index, added, “Due to concerns about high prices, conditions for purchasing durable goods have fallen to the lowest level in a year. Expectations for business conditions and the labor market have also contracted.”