Consumer Confidence Drops to Seven-Month Low

U.S. consumer confidence declined to its lowest level in seven months, dropping to 89.4 in August from 90.2 in July, according to The Conference Board. The ongoing conflict in Iran has kept gasoline prices above $4 per gallon, contributing to economic frustration among Americans.

While respondents' views of their present situation improved slightly, their short-term outlook soured. This economic dissatisfaction could pose a risk for President Donald Trump and Republicans in the upcoming midterm elections, which are less than 70 days away.

The Conference Board's survey, collected from August 3 to August 16, revealed increased pessimism about prices, geopolitics, food costs, trade, and jobs. Despite Trump blaming high prices on his predecessor Joe Biden, inflation has risen since Trump's inauguration last year. The Federal Reserve's preferred inflation gauge showed a 3.7% increase in June from a year earlier.

Consumers' views of the current labor market improved, with 27% saying jobs were 'plentiful,' up from 24.4% in July. However, optimism about future job availability declined sharply, with only 14.6% expecting more jobs to be available in the next six months.

The U.S. job market stalled unexpectedly in July as employers cut 23,000 jobs. Labor Department revisions further erased 103,000 jobs from previously reported May and June payrolls. The unemployment rate fell to 4.1%, but this was due to thousands of people dropping out of the labor market.

Six months after the United States and Israel launched strikes on Iran, the war that President Donald Trump has called a 'little excursion' has become a deeply unpopular stalemate that threatens to derail his presidency. Iran has not surrendered, shipping through the Strait of Hormuz remains severely disrupted, and there is no clear path to ending the conflict that Trump once predicted would be over in four weeks.

The war was unpopular at the outset and has become more so. Trump's approval rating has fallen from 40% to 33% since the conflict began, according to Reuters/Ipsos polling, as rising gas prices have undercut his 2024 campaign promise to lower costs for Americans.

Voter anger over high prices poses a problem for Trump's Republican Party before November's midterm elections, when it must defend narrow majorities in both chambers of Congress. The conflict has also widened a rift between more isolationist Republicans, who want to see a quick end, and Republican lawmakers who believe Trump should keep military pressure on Tehran.

Democrats appear more fired up about the elections, with 46% of self-identified Democrats describing themselves as 'very enthusiastic' about voting in November, compared to 31% of Republicans. Asked which party they would vote for if the congressional elections were held today, 36% of independents picked Democrats and 22% said Republicans.