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Data: University of Michigan; Chart: Axios Visuals

Consumer sentiment plummeted in early August, according to a widely followed survey.

Why it matters: Deteriorating sentiment signals trouble for the economy if it means consumers pull back spending.

  • Before the August reading, sentiment had generally been improving for much of this year, as the U.S. economy was on a tear going into July. Then COVID infections spiked as the Delta variant spread.

By the numbers: According to preliminary August survey results, the University of Michigan’s consumer sentiment index plunged to 70.2 from 81.2 in July.

  • This was the lowest reading since December 2011 and was much worse than the 81.0 level expected by economists.
  • The current economic conditions subindex declined by 6.6 points to 77.9, while the consumer expectations subindex dropped 13.8 points to 65.2.

What they’re saying: “It’s just one data point, but sobering,” CIBC Private Wealth CIO David Donabedian says. “It reinforces our expectations of higher market volatility over the course of the year.”

Yes, but: The survey’s chief economist Richard Curtin says, “The extraordinary surge in negative economic assessments also reflects an emotional response, mainly from dashed hopes that the pandemic would soon end.”

  • From an economic perspective, emotions are not as impactful as the actual job gains, wage gains and stock market gains that consumers have been experiencing.
  • “Sentiment has given misleading signals on spending before and we think it will do again this time,” ING chief international economist James Knightley says.

The big picture: What consumers say or feel doesn’t necessarily match what consumers do. In fact, early evidence from corporate earnings calls and credit card data suggests consumer spending activity has been relatively stable.

  • Government-mandated mobility restrictions would be bad for activity. But “we are also highly doubtful that we will see new lockdowns happen in the U.S. given high vaccination numbers that continue to rise," Knightly adds.

What to watch: The July retail sales report, which will be released on Aug.17, will provide a comprehensive, albeit early, read on the Delta variant’s impact on spending during that month.

  • But if most of the turn in sentiment occurred in August, we’ll have to wait for the subsequent report on Sept. 16.

Go deeper: Consumer prices rise in July, but rate of inflation slows

Go deeper

Changing the inflation conversation

Illustration: Annelise Capossela/Axios

Inflation looks like it’ll run hot for longer than plenty of smart people thought it would. The conversation over just how much more Americans will have to pay for their stuff has taken on a new intensity, as supply problems show few signs of fading.

Why it matters: The rate of price growth has remained consistently strong in recent months — a time that some thought would bring cooling prices after an initial reopening spike. What goes on with prices will influence the decisions made by Congress, the Biden Administration, and the Federal Reserve.

Anti-abortion activists' Supreme Court dreams are coming true

Photo illustration: Annelise Capossela. Photos: Kevin Dietsch/Getty Images

This is the moment the conservative legal movement has been building toward for decades: The solidly conservative Supreme Court is about to hear two major abortion cases within a month of each other.

Why it matters: All of this is likely to end with significant new restrictions on abortion and a clear path for Republican-led states to win the next big abortion cases, too — the culmination of a long and bitter fight for control of the judiciary.

Felix Salmon, author of Capital
3 hours ago - Economy & Business

Trump's volatile return to the stock market

Expand chart
Data: YCharts; Chart: Axios Visuals 

Donald Trump this week became both a meme stock and a social-media entrepreneur at the same time, by announcing that a new company called Trump Media & Technology Group was going to merge with an existing company listed on the stock market.

Why it matters: The medium-term promise of Trump's media company is that it will replace Twitter for anybody wanting to keep track of Trump's messages. The short-term promise is that it can be a hot new speculative vehicle for people wanting to get rich quick in the stock market.

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