Overview
- GfK reported an 11-point drop in UK consumer confidence to minus 24 in October, the largest one-month fall outside the pandemic era and a sharp loss of the summer recovery.
- The University of Michigan's final October Consumer Sentiment index fell to 48.0, the second-lowest reading on record, with one-year inflation expectations rising to 4.7%.
- Both surveys point to rising fuel and home energy costs tied to the Iran/Middle East conflict as a main driver that is eroding households' purchasing power and willingness to make big purchases.
- The UK slump tightens the window for Chancellor John Healey ahead of his budget and is likely to alarm the Bank of England, while U.S. weakness concentrated among independents raises political stakes for the midterm elections and keeps Federal Reserve officials focused on inflation expectations.
- The deterioration is broad-based across income and age groups, is linked to weaker retail indicators, and could translate into lower big-ticket spending and tougher disinflation if precautionary buying persists.