UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Consuming savings'
Dec 5, 2025
Listeners dive into the perplexing world of US consumer data, where dated information complicates the real picture. Inflation rises as consumers slash their savings to maintain spending under economic pressures. The discussion touches on how political polarization skews consumer sentiment polling, adding layers to understanding public perception. Meanwhile, eurozone growth trends reveal challenges, and expectations for French and Spanish industrial production hint at ongoing resilience. It's a lively exploration of consumer behavior and economic signals!
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Consumer Spending Maintained By Falling Savings
- US real incomes are under pressure while nominal spending has stayed flat due to falling savings rates.
- Durable goods prices shifted from reducing to increasing inflation since April, squeezing consumers.
September Data Is Backward-Looking
- September personal income and spending (and the PCE deflator) give only backward-looking insight into consumer health.
- The PCE deflator is broader and less distorted by owner's equivalent rent than other measures.
Sentiment Polls Skewed By Polarization
- The University of Michigan Consumer Sentiment poll may mislead due to extreme political polarization.
- Partisan selection bias and media consumption distort the survey's headline and details.