Consumer confidence edges down in August as future expectations weaken
Corporate Profits (Q2 2026 Preliminary Estimate): Economy-wide corporate profits jumped 9.1% in the second quarter and are up 22.8% from Q2 2025. Domestic industry profits grew 9.9% from the previous quarter and 22.8% in the past year. Profits for domestic nonfinancial corporations increased $309.6 billion, up from the $143.3 billion rise in the first quarter. Profits for domestic financial corporations rose $71.6 billion in the second quarter, after declining $3.8 billion in the prior quarter. Profits from the rest of the world saw a 3.5% increase in the second quarter.
The Present Situation Index, reflecting current business and labor market conditions, rose 6.8 points to 121.2. Meanwhile, the Expectations Index, which reflects customers’ short-term outlook for income, business and labor market conditions, fell 5.8 points to 68.2, remaining below the recession signal threshold of 80 since February 2025.
Views of the current labor market situation improved in August, with 27.0% of consumers saying jobs were “plentiful,” up from July (24.4%), while 19.5% said jobs were “hard to get,” down from July (21.7%). Looking to the future, 14.6% expect more jobs to be available, down from 16.4% in July, while 26.1% anticipate fewer jobs, up from 25.3% the previous month.
Consumers’ views of the economy were slightly more pessimistic in August. At the same time, mentions of war, groceries, trade and jobs rose from the month prior. Consumers’ 12-month inflation expectations edged up in August, and the proportion of consumers expecting higher interest rates decreased from 62.0% to 61.3%. At the same time, the share of consumers who believe a recession is “very likely” over the next year ticked up in August.
Buying plans for cars remained strong, while homebuying expectations declined slightly in August. Meanwhile, among consumers’ plans for buying other big-ticket items, plans to buy smartphones moderated. At the same time, consumers’ intentions to purchase more services weakened. Among the service categories, restaurants, bars and takeout remained the top planned service spending category alongside utilities and streaming, internet and mobile services. Overall, consumers’ views of their current financial situation weakened, while expectations for their future financial situation edged down as well in August.
