Consumers are holding up relatively well in the U.S. and Europe, despite a weaker economic environment. This could yield interesting opportunities in the stock market, particularly in the area of discretionary consumption.

A fairly favourable outlook for the employment market should buoy consumer sentiment for the rest of the year. The positive mood among consumers is likely to be reinforced by a further recovery in real incomes due to wage increases and falling inflation. 


This CIO Special reviews the outlook for spending amid macroeconomic and emerging consumer trends, with a view on the potential impacts for particular regions and sectors.


Key messages:

  • Despite the weaker economic environment, consumption in the U.S. and Europe is holding up relatively well. The main reasons for this are savings, a continued high level of employment, a slow recovery in real incomes, declining inflation and the prospect of falling interest rates in 2024.
  • Estimates of remaining savings from the pandemic years vary widely and should be treated with caution. Consumption has returned to trend in the U.S., but not in Europe. Real wage increases and better growth prospects should also drive the European recovery.
  • European and U.S. consumer discretionary stocks outperformed the overall market in 2023 as economies remained resilient but a recession was priced into the sectors. The further development of the sector depends largely on the future situation of private households in Europe and USA, as well as the growth in Asia.


The CIO Special below is available to download. Please refer to the Important Information at the end of the memo for disclosures and risk warnings.



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