January’s consumer confidence measure often rises as people feel it is a good time to spend in the sales. In addition the New Year can also improve optimism about the future. This January both factors were absent as a mood of deep pessimism among consumers pushed the GfK CCB to the lowest (-29) since March 2009, and to the biggest monthly fall since November 1994. All five of the sub-measures making up the CCB worsened on the month.
December’s surge in the spending climate measure as more people considered it a good time to make major purchases of household goods (up from –17 to –7) was more than reversed in January – down 22 points to –29 and accounted for nearly a half of the month-on-month fall.
A growing pessimism about the economic outlook – and a steady deterioration in the outlook for personal finances also contributed to the slump in the headline measure.
The measure of the expected state of the economic position in the next 12 months fell to –30, down 7 points on the month and 28 points on a year ago. It is the lowest level since March 2009.
Compared to a year ago people’s optimism about their personal finances has ebbed away as the reality of tax rises and spending cuts takes hold. The expectations measure of personal finances is down 16 points to –12, compared to +4 in January 2010.
Both current measures of the economic situation (down 3 points to –54) and personal finances deteriorated (down by 2 points to –18), although by less than the other measures.
With inflation and unemployment expectations pushing the JGFR Misery Index to a decade high (142 and above the previous level in the midst of the recession, 141 in July 2008), the outlook for the economy is very depressed with a double dip likely.
Only a surge in business investment resulting in more jobs becoming available may forestall a double dip together with government reassurances over fuel prices and more measures announced to aid growth. At the same time industrial and political unrest planned for the spring will further add to the deteriorating outlook
A full picture of the mood of consumers is published each month in the JGFR UK Consumer Confidence Monitor – for details contact firstname.lastname@example.org or ring 0208 944 7510 / 07740 027968