Residents shop at a Walmart store on August 29, 2019 in Orlando, Florida.
Gerardo Mora | Getty Images
The University of Michigan’s final print on its consumer sentiment index came in at 89.8 for August, falling below the preliminary reading from two weeks ago.
The index was at 98.4 in July, making this the largest monthly decline since December 2012. Economists polled by Refinitiv expected the final read on August consumer sentiment to reach 92.1.
The drop comes after a turbulent month in the trade war between the United States and China.
“Trump’s tariff policies have been subject to repeated reversals amid threats of higher future tariffs. Such tactics may have some merit in negotiations with China, but they act to increase uncertainty and diminish consumer spending at home,” Richard Curtin, chief economist for the Survey of Consumers, said in a release.
President Donald Trump announced on Aug. 1 that the U.S. would impose tariffs on an additional $300 billion of goods imported from China. The tariffs were originally slated to take effect in September, but some have been delayed until Dec. 15 or removed.
China announced last week that it would retaliate with new tariffs on products from the U.S. and resume those on cars and auto components.
The survey found that consumers who mentioned tariffs unprompted were more likely to expect higher inflation and rising unemployment. One-in-three consumers mentioned the tariffs spontaneously, Curtin said.
“While the overall level of sentiment is still consistent with modest gains in consumption, the data nonetheless increased the likelihood that consumers could be pushed off the ‘tariff cliff’ in the months ahead,” Curtin said.