NASHVILLE, TN – Consumer confidence weakened sharply in August as more households worried that wages will not keep pace with inflation. University of Michigan preliminary data show only 8% of consumers expect income growth to exceed inflation during the next year, down from 18% in December 2024.
Overall consumer sentiment fell 7.6% from July and 12.4% from a year earlier. Expectations for future business conditions also declined, while year-ahead inflation expectations increased to 4.3%.
The rural connection is indirect but important. The survey reported especially large declines in confidence among older consumers, lower-income households, and people without college degrees, groups that are heavily represented in many rural communities.
For farm families and rural businesses, weaker purchasing power can reduce discretionary spending at restaurants, retailers, equipment dealers and service businesses. Off-farm income can also become more important when farm margins are tight.
Final August results are due August 28, but the preliminary numbers suggest inflation remains a major household concern even as broader price growth cools.
Farm-Level Takeaway: Persistent inflation concerns could restrain rural spending and increase pressure on farm households that depend on off-farm income.