Consumer confidence in two of the world's largest advanced economies softened in August, reinforcing expectations that both the European Central Bank and the Federal Reserve will move toward interest rate cuts in September.
France: The INSEE consumer confidence index fell to 86 in August from 87 in July, missing economists' forecast of 87. The reading remains far below the long-term average of 100. Within the survey, households' view of their past financial situation improved slightly, but their expectations for the future deteriorated and fewer considered it a good time to make major purchases. Since household spending accounts for more than half of French GDP, the decline points to subdued domestic demand.
United States: The Conference Board's Consumer Confidence Index eased to 89.4 in August from a revised 90.3 in July. The Present Situation Index dipped, while the Expectations Index stayed below the threshold often associated with recession risk. Inflation, while cooling, continues to pressure household budgets, and a gradual rise in unemployment claims has added to consumer caution. Consumer spending represents more than two-thirds of US economic activity, and although retail sales have remained resilient, the savings rate has dipped and credit card debt has risen.
For financial markets, the data adds to the case for looser monetary policy. The European Central Bank is expected to consider accommodative action at its September meeting, while the Federal Reserve is also expected to begin cutting rates. Historically, expectations of lower interest rates and increased liquidity have been supportive for risk assets, including cryptocurrencies such as Bitcoin and Ethereum. However, the reports also highlight underlying economic fragility, which could temper risk appetite if consumers pull back spending sharply.
