Consumer sentiment regarding the economy has worsened in early August. The University of Michigan's consumer sentiment index dropped by 8% to 51, after two preceding months of improvement. This decline occurred despite stable inflation expectations, with one-year expectations slightly increasing and five-year expectations remaining unchanged. The most significant decrease in sentiment was observed among Republican respondents, reaching their lowest point since the 2024 election. Older consumers, lower-income individuals, and those without college degrees also experienced notable declines in sentiment. These demographics are particularly susceptible to inflationary pressures on their purchasing power. Across all consumers, there's a decreased belief that income growth will outpace inflation in the coming year. Only 8% anticipate their income exceeding inflation, down significantly from 18% in December 2024. This reflects a general perception that high prices will remain a burden. The preliminary August figure suggests a renewed dip in public optimism about the economic outlook.