Insights 
VT 
In August, US consumer confidence reached 97.4, surpassing the estimated 96.2. The revised figure for the previous month increased from 97.2 to 98.7.
Regarding current business conditions, 22.0% of consumers rated them as “good” up from 20.5% in July, while 14.2% considered them “bad”, up from 13.6%. In the labour market, 29.7% reported that jobs were “plentiful”, slightly down from 29.9% in July, and 20.0% found jobs “hard to get”, rising from 18.9%.
Consumer Expectations And Job Market Outlook
Looking ahead six months, 19.5% expect business conditions to improve, slightly higher than July’s 19.0%, while 21.9% foresee a downturn, down from 22.7%. In the job market, 17.9% anticipate more job availability, a minor decrease from 18.0%, while 26.8% expect fewer jobs, up from 25.1%. Expectations for income growth dipped to 18.3% from 18.7%, and 12.6% foresee a decrease, up from 11.8%.
Moreover, consumers noted an increase in tariff-related mentions and ongoing concerns about price hikes. Inflation expectations rose, with a 12-month forecast of 6.2% up from July’s 5.7%, yet still under the April high of 7.0%.
We see consumer confidence beat expectations, but the details suggest a growing unease under the surface. While consumers’ views on current business conditions have improved, their outlook on the job market has soured for the eighth month in a row. This creates a confusing picture, pointing towards increased market volatility in the weeks ahead.
The most significant takeaway is the jump in inflation expectations to 6.2%, reversing a three-month cooling trend. We’ve seen Core PCE inflation remain stubbornly above the Fed’s target, hovering near 2.7% last quarter, making this consumer sentiment shift particularly worrying. A re-anchoring of higher inflation expectations could force the Federal Reserve into a more aggressive stance than the market is currently pricing.
The Impact Of Inflation And Market Strategy
Pessimism about future jobs and income is a clear warning sign for consumer spending, which has been the main pillar of the economy. This report aligns with recent government data showing job openings have been steadily declining through 2025, falling below 8.4 million in the last reading. This suggests that derivative plays shorting consumer discretionary sectors while favoring defensive staples could be a prudent strategy.
Given the conflicting signals between business optimism and personal anxiety, positioning for higher volatility seems wise. We are looking at strategies like purchasing VIX call options or index straddles that profit from a significant market move in either direction. We remember from the 2022-2023 period how quickly sentiment can shift, and this report suggests the market’s recent calm may be ending.
