Consumer Confidence July 13, 2012
Posted by WorldbyStorm in Economy, Irish Politics.trackback
I’m extremely puzzled by the news, reported in the SBP, that consumer confidence is rising. Now it’s not rising by much. The SBP admits that this is a ‘tentative improvement’ in the latest RedC survey. But rise there is.
Almost half of people believe that the Irish economy will be the same or fare better in the next six months, a sharp improvement since January.
And:
Expectations about the housing market show a noticeable improvement since January.
But why? The latest figures from the housing market still show an overall decline and an literally marginal improvement in Dublin.
Moreover we know that we face another tough Budget later in the year and a succession of tough Budget’s thereafter. Each of which will be deflationary, will remove spending from the economy, will weaken the ability of people to push back against the broader economic environment. How, in light of that, can there be anything like the rather battered optimism reflected in the polling data?
Not that it’s unconfined joy. The SBP also admits that while:
Some 17 per cent of people believe that the housing market will improve over the next six months, while 30 per cent expect no change.
It continues:
That said, 35 per cent of people believe the market will be “slightly worse”, while 17 per cent of people believe it will be much worse. Negative expectations are slowly reversing, but the experience of recent years means that they are deeply ingrained.
And what of jobs, with unemployment just tipping 15 per cent, an historically significant figure, even though, as noted at the weekend the rhetoric from government is much less strong on the issue than was true in the 1980s.
Some 13 per cent of people expect the job market to improve in the second half of the year, while 30 per cent expect it to stay the same.
Nor is it possible to ascribe this to European Council summit, the poll was taken before that.
But perhaps the truth is that in general terms people expect improvements, but once they are asked about specific areas they begin to analyse their situation and offer more considered, and essentially pessimistic, responses. For example:
However, in spite of the improved outlook, most consumers say they expect to cut spending on a range of areas in the next 12 months.
One would wonder where the question on the economy came, at the beginning or the end of the polling process?
I wonder is it a case of people being influenced by the sort of attitude we were talking about here not long ago, where the health of the economy is measured in a way that’s completely disconnected from anything that impacts on people’s lives. Like this gibbering idiocy, for example:
“IRELAND has become the poster boy of international lenders, held up as a model of European austerity to problem child Greece.”
http://www.independent.ie/opinion/comment/padraic-halpin-and-harry-papachristou-why-ireland-is-eus-poster-boy-and-greece-is-still-at-the-back-of-the-class-3166963.html
What do you mean, 15% unemployment? But the lenders love us! We must be doing something right!
(sure we are – paying them back a load of money we don’t owe. Not surprising they can manage a bualadh bos while sniggering at our expense)
Actually this rise in consumer confidence is entirely in the eye of the beholder, the SBP. Because the figures actually say that only 13% of people expect the job situation to improve and only 17% expect house prices to improve. Given the parlous state of both at the moment, someone expecting them to stay the same can hardly be said to be displaying ‘confidence.’ ‘Despair’ is probably a more valid interpretation.
‘Gibbering idiocy’ is right Ed. Sometimes I think a certain amount of people in this country will put up with anything if they’re told it reflects well on us overseas. Poster child my hole.
Depressingly on the money both your statements.
There’s also the magical thinking aspect of it that if only there was ‘confidence’ then the market would come right…etc…etc. But confidence is built on essentials, none of which are anywhere near being stable.
Dan O’Brien explains it all:
“THE DOMESTIC economy grew for the first time in two years in the first three months of 2012, according to figures published accidentally yesterday on the website of the Central Statistics Office.”
“In the first quarter of 2012, the widest measure of economic activity – gross domestic product (GDP) – which includes exports and imports, contracted by 1.1 per cent on the previous three months.”
“Gross national product (GNP), which is a narrower measure than GDP but wider than domestic demand, contracted by 1.3 per cent quarter-on-quarter in the January-March period.”
http://www.irishtimes.com/newspaper/frontpage/2012/0712/1224319862378.html
It could be that this simultaneous contraction/expansion of the Irish economy, – a singularity- has something to do with the renewed interest in Ireland becoming a member of CERN.