(Oct 27): French consumer confidence plummeted to its lowest level in 13 years in October as households reckoned with multiple shocks from a bond market selloff to protests that descended into rioting.

The monthly gauge dropped five points to 80 with respondents becoming more concerned about their financial situation, living standards and unemployment, statistics agency Insee said on Tuesday. That’s below the median estimate of 85 in a Bloomberg survey and lower than any economist forecast.

The reading has been stuck below its long-term average of 100 for five years amid bouts of inflation and political and budget instability. 

But the backdrop has worsened significantly in recent weeks with the minority government entering another showdown over austerity measures, a surge in borrowing costs as investors dump French bonds and an escalation of student protests. 

The tensions boiled over on Oct 17 with violence breaking out around cost-of-living demonstrations, looting across the country and thousands of arrests. 

Insee’s latest consumer confidence measure doesn’t reflect the full impact of the upheaval: while the the cutoff was Oct 19, most of the responses are collected at the start of the three-week survey period. 

“Weak sentiment is likely to weigh on spending as political uncertainty increases. This brings further downside risks to our fourth-quarter growth forecast,” says Jean Dalbard, economist at Bloomberg Economics.

In an attempt to calm the unrest that began with students blocking high schools, the French government announced on Monday it will overhaul the system for allocating university places, limit some class sizes and provide loans for building renovations. 

But protests are set to continue on Saturdays as well as a day of demonstrations and strikes on Nov 5 that’s backed by the country’s biggest trade unions. 

President Emmanuel Macron said on Monday he would also maintain a heightened security presence, similar to the deployment that ensured relative calm on Saturday. 

“It’s not normal that six months before a presidential election, our country should be in such a state of turmoil,” he said after visiting police in Marseille. “Some people are happy to see disorder, I’m not — never again another Oct 17.” 

Details of Insee’s survey showed that assessments of past living standards dropped to the lowest since the agency began measuring in 1972. Meanwhile, unemployment expectations rose to the highest since the Covid pandemic and consumers’ outlook for their financial situation was the gloomiest in four years.

The report also showed heightened inflation expectations as the proportion of households who foresee price increases in the next twelve months advanced. 

Data on Friday is expected to show inflation accelerated further to 3.6% this month. A reading of gross domestic product, also due that day, will likely reveal that the economy expanded only 0.1% in the third quarter after stagnating in the previous three months and contracting at the start of the year.

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