Diverging Consumer Confidence Across Developed Market Economies Amid US Dollar Depreciation 

  • The recent depreciation of the US dollar has coincided with a marked and widening divergence in consumer confidence dynamics across major developed market (DM) economies. Over 2025-26, US consumer confidence weakened sharply, falling well below its long-run average and deteriorating more severely than in both the Eurozone and the UK.
  • US consumer sentiment, as measured by the Consumer Confidence Index (z-score), declined steadily from -0.42 in January 2025 to -1.91 by January 2026, interrupted only by brief and shallow mid-year improvements, the normalised readings show. The decline reflects rising household pessimism about business conditions, inflation pressures, and labour-market conditions, as the share of respondents reporting jobs as “plentiful” has continued to fall.
  • What distinguishes the US from its peers is that the deterioration appears less attributable to conventional financial-conditions channels, and more to a combination of elevated political uncertainty, tariff-related concerns, and a clear softening in hiring momentum. Consistent with this interpretation, US job gains in 2025 were the weakest outside a recession since 2003.
  • By contrast, Eurozone confidence has shown tentative but increasingly broad-based stabilisation. Although still negative, sentiment improved through late 2025 and into early 2026, reaching -12.4 in January 2026, the highest level in nearly a year and well above mid-2025 lows.
  • The European Commission reports that confidence rose by 0.8 points in January 2026, supported by better household assessments of their financial situation and the outlook for major purchases, even as overall sentiment remains below long-run norms. Meanwhile, the UK follows a different trajectory. Data show sentiment gradually improving from -0.24 in January 2025 to +0.32 in January 2026, placing the UK clearly above both the US and the euro area in normalised terms. This suggests modest stabilisation in personal-finance expectations, even as views on the broader economic outlook remain cautious.

(Source: BMI, A Fitch Solutions Company)