The Rebound Holds

Consumer sentiment held its ground in August. The RealClearMarkets/TIPP Economic Optimism Index, the first monthly read on U.S. consumer confidence, eased to 45.1 from 45.5 in July, a decline of just 0.4 points, or 0.9%. After July's 3.0-point surge, the index held nearly all of that gain in August. The past five months read 42.8, 42.6, 42.5, 45.5, and 45.1.

Even so, the index has now spent twelve consecutive months below the neutral 50 mark, a full year in what we classify as the pessimism zone. The last reading at or above 50 was August 2025, at 50.9.

August's 45.1 is 8.1% below the 307-month historical average of 49.1. Of the 307 monthly readings since the index began in February 2001, 232 have been higher and 69 lower. The 45.1 mark itself is not new: it has been matched exactly five times before, in December 2012, May 2013, August 2013, March 2014, and February 2023.

The RCM/TIPP Economic Optimism Index has a strong track record of anticipating the consumer-confidence indicators later released by the University of Michigan and The Conference Board. From February 2001 to October 2023, TIPP released this index monthly in collaboration with its former sponsor and media partner, Investor's Business Daily.

RCM/TIPP surveyed 1,463 adults for the August index from July 28 to August 1, using TIPP's panel network; the margin of error is ±2.9 percentage points. Results range from 0 to 100, with readings above 50 indicating optimism, below 50 signaling pessimism, and 50 neutral.

The RCM/TIPP Economic Optimism Index has three key components. In August, two of the three rose, and one fell, a departure from July, when all three climbed together. This time, personal finances and federal-policy confidence rose, while the six-month economic outlook fell.

• The Six-Month Economic Outlook, which measures how consumers perceive the economy's prospects over the next six months, declined 5.2%, from 42.1 in July to 39.9 in August, surrendering 2.2 of the 5.0 points it had gained the month before.
• The Personal Financial Outlook, a measure of how Americans feel about their own finances over the next six months, rose 1.5%, from 52.2 to 53.0, its highest reading since March and its clearest hold above the neutral 50 line this summer.
• Confidence in Federal Economic Policies, a proprietary RCM/TIPP measure of views on the effectiveness of government economic policies, rose 0.5%, from 42.1 to 42.3, a third consecutive monthly gain and its highest reading since March.

Party Dynamics

Democrats rose 3.7 points to 34.3, their first meaningful move up in months, though they remain the most pessimistic group we track. Republicans slipped 2.8 points to 61.1, giving back part of July's jump, and independents fell 2.7 points to 37.9. The Democrat-Republican gap narrowed from 33.3 points in July to 26.8 in August.

The narrowing is the mirror image of last month's. Where July's widening gap came from Republican recovery against Democratic stasis, August's narrowing comes from the reverse: Democrats moved up while Republicans and independents eased. The gap has now widened and closed again across three months, and each turn has had a different author.

Investor Confidence

Respondents are counted as “investors” if they hold at least $10,000 in the stock market, personally or jointly, directly or through a retirement plan. They are typically the most confident segment we track, and in July they snapped back above neutral after slipping below it in June for the first time in two years.

In August, they held that ground. Investor confidence edged up 0.4 points to 55.7, a second month above the neutral line, while non-investor confidence slipped to 40.4 from 40.8. The gap between the two widened again, from 14.5 points to 15.3.

Momentum

The Optimism Index at 45.1 sits above its three-month (44.4) and six-month (44.3) averages and below its twelve-month (45.9). The Six-Month Outlook at 39.9 is just above its three- and six-month benchmarks (both 39.7) and below its twelve-month of 41.5. Personal Financial Outlook at 53.0 clears its three- and six-month averages (51.8 and 51.7) and matches its twelve-month exactly. Confidence in Federal Policies at 42.3 tops its three- and six-month figures (41.5 and 41.6) and trails its twelve-month of 43.2. On nine of twelve component-to-average comparisons, August reads at or above its trailing baseline, up from eight in July and zero in June. The near-term averages have turned; the twelve-month lines, still weighed down by last autumn's higher readings, have not.

Demographic Analysis

The number of groups in positive territory measures the breadth of optimism across American society. This month, five of the 21 demographic groups RCM/TIPP tracks scored above 50 on the Economic Optimism Index, down from seven in July but still well above the two of June. The five: adults aged 25-44, men, households earning $75,000 or more, Republicans, and investors. Dropping off July's list were the youngest adults and Black and Hispanic respondents. Eight groups improved month over month, down from seventeen in July.

The month's gains came, notably, from the segments that had lagged the spring rebound. Adults aged 45-64 rose 4.2 points, Democrats 3.7, households earning under $30,000 2.9, and the Midwest 2.1. The declines clustered among July's leaders: the youngest adults, aged 18-24, fell 7.9 points to 44.1 off an elevated base, middle-income households earning $50,000-75,000 fell 6.5, adults 65 and older fell 6.1, and the West gave back 3.2. The composition of optimism rotated even as its overall level held, the laggards catching up as the leaders cooled.

Financial Stress

RCM/TIPP also releases a companion measure, the RCM/TIPP Financial-Related Stress Index, the only monthly metric tracking the financial stress Americans feel. The gauge runs opposite to the optimism index: the higher the number, the more stress, with readings above 50 signaling elevated strain and 50 neutral.

The Stress Index rose 1.9 points, or 3.0%, from 62.8 in July to 64.7 in August, erasing July's brief relief. It has averaged 60.5 since December 2007, and August's reading sits 6.9% above that long-term norm. The last time the index fell below 50 was February 2020, just before the pandemic, at 48.1.

The increase was broad: 18 of the 21 groups we track reported more stress in August. The sharpest rises came from Black and Hispanic respondents (up 5.5 points), households earning $75,000 or more (up 5.5), and adults aged 25-44 (up 4.6), the last two among the very groups whose optimism had held up best. The exception this month, in an inversion of the recent pattern, was the youngest cohort: adults aged 18-24 saw stress fall 2.3 points to 60.9, even as their optimism dropped sharply. The 18-24 volatility we have flagged since May persists, only now it runs the other way.

Stress And Optimism, Side By Side

For a second time in three months, the two gauges parted company. In July, both moved toward relief, optimism up and stress down, and the distance between them closed to 17.3 points, the narrowest since March. In August they diverged again: optimism edged down, stress edged up, and the gap widened back to 19.6.

The spring's pattern was motion on the stress side against a flat optimism line. July's was motion on both sides, in the same direction. August's is smaller and split, with the headline holding its ground while stress reclaimed part of the prior month's decline. The rebound of July has neither extended nor unwound. It has, for one month, simply held. Whether that is a floor or a way station is the question September will answer.

RealClearMarkets will release the next report at 10 a.m. EST on Tuesday, September 1, 2026.