30th September 2026
Something rather important is happening in the American economy. Consumer confidence has fallen to its lowest level in more than 12 years, while the labour market is showing signs of becoming increasingly cautious and Britain is displaying some remarkably similar symptoms.
That does not mean either country is necessarily heading for recession. But it does suggest that households and businesses are becoming less confident about what lies ahead, and that matters because confidence can influence spending, hiring and investment before the effects become obvious in the headline economic growth figures.
The latest American figures make uncomfortable reading. The Conference Board's consumer confidence index fell from 88.6 in August to 81.9 in September, its lowest level since April 2014. The deterioration was not confined to people's assessment of their current circumstances. Expectations for the next six months also weakened, with the expectations index falling to 63.6.
American consumers are particularly concerned about the cost of living and employment. The proportion saying jobs are plentiful fell to 23.6%, while those saying jobs are hard to get increased to 21.9%. Looking ahead, 28.4% expected fewer jobs to be available in six months, compared with only 14% expecting more jobs.
Yet there is an important qualification. America's employment market has not collapsed. The latest US figures show 7.1 million job openings in August, with hiring at about 5.2 million and layoffs and discharges at 1.6 million. The number of vacancies was little changed during the month.
That creates an interesting situation. Businesses are not necessarily sacking large numbers of workers, but they appear increasingly cautious about expanding their workforce. At the same time, workers and consumers are becoming less confident about their prospects.
That can be an important stage in an economic slowdown. A company does not have to announce mass redundancies for the labour market to weaken. It can simply stop replacing people who leave, postpone expansion, reduce overtime or decide that a new vacancy can wait.
Britain is showing many of the same characteristics.
UK vacancies have fallen to about 702,000 in the three months to August, according to the latest figures, the lowest level outside the pandemic period for more than a decade. The weakness is particularly significant because vacancies provide an indication of employers' willingness to recruit before changes in unemployment necessarily become apparent.
British consumers are also becoming more cautious. Recent consumer-confidence surveys have shown increased concern about jobs, interest rates and the cost of living, with confidence falling to a three-month low in September.
The Bank of England's own assessment is particularly revealing. It says labour demand remains weak, with vacancies below pre-pandemic levels, while consumer spending remains subdued. Its business contacts report that employment intentions are broadly flat and that weak demand and high labour costs are holding back recruitment.
There is therefore a striking parallel between the two economies. In America, consumers are increasingly worried that jobs will become harder to find. In Britain, vacancies are already falling substantially and employers are reporting little intention to increase headcounts.
But Britain has an additional problem. Inflation remains uncomfortable at the same time as the economy is struggling to generate strong demand. The Bank of England reported that UK CPI inflation reached 3.1% in August, while the Bank Rate remained at 3.75% in September. The Bank also warned that higher energy prices could push inflation higher over coming quarters.
This creates a particularly awkward problem for policymakers. If the economy weakens, there is an argument for lower interest rates to encourage borrowing, investment and spending. But if energy and other costs push inflation higher, cutting rates becomes more difficult.
It is a problem that America is also wrestling with, although the circumstances are not identical.
For households, the consequences can be more immediate than the economic statistics suggest. Someone who is worried about keeping their job is unlikely to rush out and buy a new car, replace a kitchen or book an expensive holiday. Someone who is already struggling with higher food, heating and transport costs is even more likely to postpone discretionary spending.
Businesses respond to the same uncertainty. If customers are spending less, investment becomes harder to justify. If wages, energy and other costs are rising, employers may look for productivity improvements rather than taking on additional staff.
The Bank of England is already seeing evidence of this behaviour. Its latest business survey found subdued consumer spending, weakness in construction and property, and continued pressure on consumer-facing businesses. Some firms are investing in automation and technology, while recruitment is increasingly focused on specific skills rather than general expansion.
This is why the American confidence figures deserve attention in Britain even though the two economies are very different.
Consumer confidence does not automatically cause a recession, and one bad monthly survey should never be treated as proof that an economy is about to collapse. America's labour market still has millions of vacancies, and Britain's economy has also shown some resilience. UK GDP increased by 0.4% in the second quarter of 2026 and monthly GDP rose by 0.4% in July.
The more subtle warning is that confidence, recruitment and spending can weaken gradually rather than suddenly.
That may be the bigger economic story for Britain as the Chancellor prepares for the Budget.
Households are facing higher energy costs, businesses are dealing with higher employment and input costs, vacancies are falling and consumers are becoming more cautious. At the same time, the Government needs economic growth to generate the tax revenues required to finance public services and meet its fiscal objectives.
America's confidence crash therefore provides Britain with something more useful than a prediction of what will happen here.
It provides a warning about what to watch.
If British consumer confidence continues to fall, vacancies continue to decline and employers become even more reluctant to recruit, the pressure on the economy could become considerably greater even without a dramatic recession headline.
Sometimes an economy does not suddenly fall off a cliff.
Sometimes people simply stop spending, businesses stop hiring and everyone waits to see what happens next.