Goldman Sachs G10 Consumer Scorecard: Euro Area Leads, US Lags at P45 as Middle East Tensions Bite

Original title: G10 Consumer Dashboard: May 2026 - Slower Real Income Growth in North America

Executive Summary

Goldman Sachs' May 2026 G10 Consumer Dashboard reveals a widening divergence in household sector health across major developed economies. The euro area emerges strongest at the 65th percentile, supported by tight labor markets and robust balance sheets. Meanwhile, the US sits at just the 45th percentile, with Canada trailing at the 30th percentile — weighed down by softening consumer confidence and eroding real incomes.

The overarching concern: rising energy prices stemming from the Middle East conflict are beginning to squeeze household purchasing power across the board.

Consumer Health Rankings

The Energy Price Wild Card

Goldman Sachs analysts warn that escalating energy costs — directly tied to the Middle East situation — will continue to erode real incomes across all G10 economies in the coming months.

Key data point: US real personal consumption expenditures (PCE) growth currently holds at 2.1%, but the bank projects a meaningful deceleration as energy bills eat into disposable income.

Australia offers a stark case study. Nominal household spending plummeted 1.1% month-on-month in April, led by a sharp collapse in travel spending. The Australian Bureau of Statistics explicitly attributed this decline to the "widespread impact and response to the Middle East conflict."

Labor Market Divergence

Job markets tell a mixed story:

• Euro area: Unemployment near historical lows — a pillar of strength
• Japan: Nominal wage growth sustaining above 3% — one of the few bright spots globally
• Canada: Unemployment climbing to 6.9% (20th percentile historically), housing market deteriorating
• UK: Labor market momentum fading — unemployment rising, wage growth slowing
• US: Unemployment moderate at 4.3% (P65), but consumer confidence metrics tell a grimmer story

Confidence at Historic Lows

Consumer confidence across the US has touched multi-year lows, with households repeatedly citing elevated prices as a top concern:

• University of Michigan index: lowest reading since June 2022
• Conference Board index: lowest since May 2020
• Australia Westpac-Melbourne Institute index: 83.0 vs. historical average of 100.1

Balance Sheets: The Last Line of Defense

The one consistent cushion across all G10 economies is household balance sheets:

• US and Japan: Net worth-to-income ratios near historical peaks
• Canada and euro area: Around the 90th percentile
• UK: Around the 65th percentile

Goldman cautions that strong balance sheets alone cannot indefinitely offset collapsing confidence and shrinking real incomes.

Debt service ratios (higher = better):

• US: P75
• Euro area: P75
• Japan: P55
• UK: P45
• Australia: P40
• Canada: P25 (meaningful financial stress)

Our View

This report validates what many macro watchers have suspected: the global consumer is under more pressure than headline spending figures suggest.

The Middle East-driven energy shock is arriving at exactly the wrong moment — just as central banks are wrestling with renewed inflation concerns while trying not to crush household finances further.

What makes this particularly tricky for policymakers: the usual playbook of rate cuts to support consumers comes with serious side effects right now. Cutting rates aggressively could reignite inflation. But leaving rates elevated risks pushing an already-fragile consumer over the edge.

For investors: defensive positioning in consumer staples, energy, and quality over growth names makes sense. The era of American consumer exceptionalism appears to be fading as the world collectively catches a cold from the Middle East.