US consumer moods unexpectedly deteriorated early this month, when inflation expectations moved meaningfully higher.

That’s according to the preliminary read on University of Michigan sentiment, the last of this week’s key US macro releases.

At just 58.6, the headline read on the nation’s marquee gauge of household sentiment counted as a miss. Consensus wanted 62, which would’ve marked a slight uptick from July’s final readout.

As the figure shows, the drop for August was the first since “Liberation Day.” The headline’s 18% below where it sat on the eve of Donald Trump’s second inaugural.

This month’s deterioration was almost entirely due to a drop on the current conditions index, which fell 10% MoM. The expectations gauge was more or less unchanged.

Survey director Joanne Hsu described “rising worries about inflation,” noting that buying conditions for durables “plunged 14%” to the lowest levels this year. Consumers, she said, are concerned about “high prices” and “purchasing power.”

Year-ahead inflation expectations rose to 4.9% from 4.5% in July, nearly half a point ahead of estimates. More worrying: The longer run measure rose 0.5ppt.

As the figure shows, that’s the second-largest month-to-month increase on record, behind only March of this year.

The good news is, both the Michigan inflation metrics remain well off the April panic highs, but remember: The longer run inflation expectations measure from the Michigan release matters to the Fed.

“Overall, [households] are no longer bracing for the worst-case scenario for the economy feared in April when reciprocal tariffs were announced and then paused,” Hsu remarked. “However, consumers continue to expect both inflation and unemployment to deteriorate in the future.”