US Economic Confidence Plummets as Chicago PMI Enters Contraction

US economic indicators showed a significant decline in confidence and business activity during August 2026. The MNI Chicago Purchasing Managers' Index crashed to 47.1, down from 57.6 in July. This move into contraction territory represents the largest month-over-month drop since the COVID-19 pandemic.

Consumer sentiment also declined for the first time in three months, falling to 51.7 according to data from the University of Michigan. This downturn was observed across all political groups. While year-ahead inflation expectations eased slightly to 4.0%, consumers remained concerned about the broader economy.

Joanne Hsu, director of the University of Michigan survey, noted that consumers are increasingly worried that economic prospects are weakening beyond immediate pocketbook issues. These declines occur amid ongoing policy uncertainty and the Iran conflict, which has fueled expectations of rising gasoline prices.