More economic 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 September 2008.
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 Area.
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 firstname.lastname@example.org