Consumer spending in the eurozone is set to worsen from Q3

We estimate consumer spending in the eurozone increased by 0.8% q/q in Q2, despite persistent elevated inflation denting real incomes and depressing consumer confidence. High-frequency indicators that households carried on spending, particularly on services, and consumption should contribute positively to growth in Q3. However, the outlook continues to worsen for Q4 and beyond, with consumption fundamentals expected to worsen over the winter.

What you will learn:

• The pace and magnitude of the consumer rebound surprised to the upside in H1.
• We think the recent strong rebound in consumer spending is unsustainable and unlikely to continue beyond Q3, and some high-frequency data are already showing signs of slowing down.
• In fact, there are very few reasons to be optimistic regarding consumption.