This post is a guest contribution by Rebecca Wilder*, author of the News N Economics blog.
Today I wrote an article on Angry Bear, Consumers around the world are generally more upbeat, but not uniformly so, highlighting the still melancholy consumers around much of the world, especially in the U.S. Here is an excerpt from the article:
“Confidence, consumer, investor, and business, is key – let’s focus on the consumer. The one that accounts for roughly 17% of global GDP – i.e. the U.S. consumer – remains afflicted by an excessive debt burden and record unemployment. In contrast, consumer confidence is rebounding smartly in other parts of the world, developed and developing.
Advanced consumers showing some confidence, but the U.S. consumer confidence index remains 39% below that at the onset of the recession.
“The chart illustrates various measures of consumer confidence across a selection of advanced economies (you can see the exact sources here). Consumer confidence in the U.S., U.K., Germany and Ireland remains well short of its January 2008 levels. Notably, confidence in the U.S. has moved laterally since May 2009 despite recent gains in the fourth quarter of 2009.”
I wanted to add just a few comments to this post regarding the “not uniform” part of the Angry Bear title. Ostensibly (in the chart), consumers in some advanced economies – Australia, Spain, Italy and Tokyo – are “feeling” better off than those in the U.K., U.S. and Germany… in levels, that is. But with the exception of Australia, the recent trend is admittedly less sanguine. Let’s see why.
From the Conference Board (U.S.):
“Consumer Confidence rose for the third consecutive month, primarily the result of an improvement in present-day conditions. Consumers’ short-term outlook, while moderately more positive, does not suggest any significant pickup in activity in the coming months.”
From the GfK Group (Germany):
“German consumers are assuming that the German economy is slowly recovering from the recession, a view that is shared by many experts. However, small set-backs cannot be ruled out, and economic expectations have consequently stagnated in January.”
From Nationwide (U.K.):
“Although it is still early days, these lower expectations may foreshadow a more sluggish consumer outlook in 2010 as stimulus measures are withdrawn.”
From the Westpac Group (Australia):
“Four of the five components of the Index increased in January. All components are seasonally adjusted. Assessments of ‘family finances compared to a year ago’ increased by 5.2%; expectations about ‘family finances over the next 12 months’ increased by 10.5%. Expectations for ‘economic conditions over the next 12 months’ rose by 6.8% although expectations for ‘economic conditions over the next five years’ fell by 2.1%. Opinions on whether it is a ‘good time to buy a major household item’ rose by 7.7%”.
Cheery Australia is certainly the odd man out. At least in the latest reports, it is the expectations index that is dragging confidence in the U.S., Germany and the U.K. Ick, not good for spending nor growth.
Source: Rebecca Wilder, News N Economics, February 2, 2009.
* Rebecca Wilder is an economist in the financial industry. She was previously an assistant professor and holds a doctorate in economics.
