UBS has shifted its consumer exposure, underweighting the U.S. while overweighting Europe. The Swiss bank cites diverging macro trends, income dynamics, and balance‑sheet conditions across the Atlantic. Forecasts show U.S. consumption growth falling to 2.2% in 2026, down from 2.6% in 2025 and lower income households face pressure.

US slowdown stems from wage stagnation, a shrinking savings ratio, and stalled labor‑force growth. UBS warns that lower‑income consumers, who spent excess pandemic savings, now confront higher tariff‑impacted goods and subdued confidence, tightening the domestic demand curve in the near term as inflation remains volatile and policy uncertainty.

Europe, by contrast, enjoys higher real wages, a 3‑percentage‑point surplus savings cushion, and rising household equity. UBS projects 0.9% consumption growth in 2026, citing falling gas prices, a stronger euro, and lower interest rates that encourage spending over saving in the short term as European markets continue to recover.

Investors should monitor the euro‑US dollar pair, as a stronger euro historically boosts retail and airline earnings. UBS’s stance signals a shift toward sectors with better balance‑sheet resilience, while U.S. consumers face tightening credit and wage pressures that could dampen growth in the next two quarters of inflation.