Consumer sentiment
Consumer sentiment dropped sharply in August, falling to 51.0 compared to 55.2 in July. Getty Images

Consumer sentiment dropped sharply in August, falling to 51.0 compared to 55.2 in July. Sentiment among Republicans is almost 20% lower than before the war in Iran began in late February, according to the latest figures from the University of Michigan's Surveys of ​Consumers.

The figure is significantly lower than that given by economists surveyed by Reuters, who expected it to clock in at 54.5. The one from August 2025 stood at 58.2, marking a 7.6% decrease.

Joanne Hsu, the director of the Surveys of Consumers, highlighted the drop among Republicans, saying it is the "lowest since the 2024 election."

"Although the early-month weakening ​in sentiment was ​pervasive ⁠across various demographic groups, notably large reductions were seen among older ​consumers, lower-income consumers, and those without ​a ⁠college degree."

"These groups are all particularly vulnerable to any erosion of purchasing power stemming from inflation. Across all consumers, only 8% expect their income growth to exceed inflation in the year ahead, down from 18% in December 2024, a reflection of the belief that high prices will continue to be burdensome," the report adds.

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Figures from retail sales add to the picture. They declined unexpectedly in July, notching the biggest drop since May 2025, according to data from the Commerce Department.

However, the Census noted, the figure is up 5% from the same month last year. Total sales for the quarter were up more than 6% compared to the same period from 2025.

Excluding sales at gas stations and auto dealers, the figure dropped 0.2% as energy costs from the war in Iran remain high. The national average gas prices compiled by AAA stayed above $4 a gallon on Friday, and there are no perspectives of a swift end to the conflict. It is almost $1 than the average last year.

In this context, Vice President JD Vance said the Trump administration has a new primary goal in the war with Iran: keeping "oil and gas cheap for Americans all over our country."

Speaking to Fox News, he went on to say that "obviously goal number two is ensure that Iran never gets a nuclear weapon," but the remarks illustrate concerns caused by the economic impact of the continued closure of the Hormuz Strait.