stimulus needed for stressed consumers?
Consumer optimism about economic prospects reached heights
unseen since the late 1990s last autumn and winter. Since the spring optimism has
turned rapidly to pessimism with a downward spiral towards consumer depression
– when the level of future economic optimism is below the measure of current
economic sentiment. The only time this occurred in the past decade was
following 9/11. A combination of the ending of the stimulus measures and tough
measures being introduced by the coalition government to address the fiscal
deficit are behind the slump.
In the latest GfK Consumer Confidence Barometer, produced
for the European Commission, confidence fell 3 points to –22, the fifth month
of decline and below the
-20 level that points to very low or negative growth. A year
ago the measure stood at –25, although it remains well below its all time low
of –39 set two years ago.
Three of the five sub-indices fell in July – the measure of
the economic situation slumped 13 points to –25 (its lowest measure since March
2009), the present measure of the economic situation fell 2 points to –48 and
the forward looking measure of personal
finances fell 4 points to –6.
Only a surge in the spending climate measure on major
purchases – up 8 points to –16 – some retail therapy in the July sales seen as
an antidote to the increasing gloom -prevented the headline measure from a
bigger fall. The measure of personal finances now compared to 12 months ago is
unchanged at –14 on the month.
Both unemployment and inflation intentions fell sharply in
July pushing the JGFR Misery Index (the combined unemployment/inflation
expectations measure) to 132, up 23 points on June and its worst level since
Only further economic stimulus would seem to prevent a
consumer depression taking hold.
For charts on Economic optimism and the Misery Index and
more insight into Consumer Confidence and financial activity visit the Members
To get your own detailed insight into the mood of the
consumer towards spending and saving, household and personal finances and to
the economy turn to the UK Consumer Confidence Monitor covering
analysis from the two leading confidence indices – GfK NOP and Nationwide.
JGFR also produces a High Earners Version of the CCM,
covering households earning over £50,000 a year. Other segments available for
analysis are, for example, regions, women and the over 50s. Tailor made
presentations for clients can be arranged.
To find out more contact: John Gilbert 0208 944 67510 /
07740 027968 or email email@example.com