Consumer confidence dips in August

Consumers sentiment dipped slightly in August from the prior month, but American’s were still more upbeat than a a year ago, according to the University of Michigan Sentiment Index released today (Aug. 30).

The final reading of the Thomson Reuters/ University of Michigan survey was 82.1 in August, retreating from 85.1 in July — a six-year high.

Consumers were more optimistic than economists expected, outpacing their forecast reading of 80.5.

"Most of the late August gain was due to more favorable income expectations, with consumers expecting the largest income gains in nearly five years, although the median expected increase was just 0.9%, less than the expected rate of inflation," survey director Richard Curtin noted in the release.

They survey found that sentiment varied among income levels with households below $75,000 growing more pessimistic in the face of higher interest rates and stagnant income growth.

These concerns helped to drive the consumer expectations downward.

Economists fear consumer sentiment could weaken if higher interest rates start to slow momentum in a housing revival that has been one of the brightest spots in the overall U.S. recovery.

Inflation remains low around 3% for the one-year period, while the longer term inflation outlook was 2.9%, according to Reuters.