Consumer Confidence July 13, 2012Posted by WorldbyStorm in Economy, Irish Politics.
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.
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.
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?