Consumer resilience

Weekly Updates

As the Gulf war drags on, wage growth is struggling to match the pace of inflation. US civilian wages rose 3.1% y/y in the third quarter. Consumer prices are currently rising by 3.7%. European wages are growing faster than inflation, but not by much. Consumers have reduced how much they save each month to help cover higher prices.
However, alternative income streams have been growing in importance. In 2025, the used clothing website Vinted sold EUR 10.8bn of second-hand goods. That is the same as what Belgians spent on clothing last year. Income from such side hustles add to consumers’ spending power and are a mitigating factor that labor market data overlooks.
Aging populations also change the importance of wage growth. In the US, the contribution of paid employment to household income fell below 60%—the only time it has done so, aside from the pandemic. Pension income is more significant. The rise of self-employment means that proprietors’ profits, rather than wages, play a larger role in supporting spending power.
The resilience of consumer spending in the face of rising prices owes much to changing savings behavior. But some of the resilience comes from the fact that wages matter less than they used to as a driver of spending power.