Consumer sentiment diverges in US and UK markets

Consumer sentiment showed divergent trends in the United States and the United Kingdom during August. In the U.S., the preliminary University of Michigan Consumer Sentiment Index fell to 51.0, a 7.6% decline from the previous month and well below economist expectations. This downturn was driven by persistent concerns regarding inflation and a weakening economic outlook, with year-ahead inflation expectations rising to 4.3%. Significant declines in sentiment were noted among older, lower-income, and non-college-educated consumers.

Conversely, the British Retail Consortium reported an improvement in UK consumer confidence, reaching its highest level since the onset of the Iran conflict. Personal financial situations improved, and retail spending rose to +8 in August. While Gen Z consumers reported increased spending plans, the British Retail Consortium noted that maintaining this momentum depends on the government's ability to ease household budget pressures through upcoming fiscal policies and business cost reductions.