From the Desk - Economic Commentary
Scott Hofer, Member Strategies Manager - 8/28/2026
U.S. stocks opened mostly flat this morning, with the Dow edging higher while the S&P 500 and Nasdaq were little changed after Thursday’s strong technology-led rally. The muted opening reflected investor caution ahead of Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole symposium this morning, which could provide clues about the future path of interest rates. Markets are also slow to move this morning as investors continue to digest the latest economic releases.
On the economic data front, the Chicago PMI fell sharply to 47.1 in August from 57.6 in July, moving back below 50, the threshold that separates expansion from contraction. The result was a major downside surprise, missing economists' expectations of roughly 58 and representing a decline of more than 10 points in a single month. The report suggests a significant deterioration in business conditions across the Chicago region after three consecutive months of expansion. Because the Chicago PMI is often viewed as an early indicator for national manufacturing activity, the weak reading may raise concerns about slowing economic momentum and could temper expectations for upcoming U.S. manufacturing data.
The University of Michigan’s final Consumer Sentiment Index reading for August was 51.7, confirming the preliminary reading and marking a 6.3% decline from July and an 11.2% drop from a year ago, reflecting persistent concerns that inflation will remain elevated. Consumers reported worsening expectations for business conditions, with both short- and long-term economic outlooks deteriorating as ongoing policy uncertainty and concerns about higher gasoline prices weighed on confidence. Sentiment weakened across political affiliations and demographics, with particularly large declines among older consumers, middle- and lower-income households, and those without stock holdings. On inflation, one-year inflation expectations edged down to 4.0% from 4.2%, while long-run inflation expectations held steady at 3.3%.
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