Christmas Shopping December 20, 2013Posted by WorldbyStorm in Economy, Irish Politics.
Perhaps it’s me, but there’s a curious tone to a piece in the SBP on how ‘money worries affect Christmas spend’. Perhaps it is because it runs contrary to the received narrative of ‘recovery’. In short, it references a “2013 Christmas Shopper: Confidence & Consumer Behaviour” report issued by Coyne Research which away from the sunny uplands of Government rhetoric reveals a population very very dubious about expending significant sums at Christmas.
Some interesting statistics:
“Two thirds of Irish adults feel under more financial pressure this Christmas than last with the LPT and higher health insurance bills being cited as two major sources of financial pressure”.
It would of course be useful to know what the figures are for those who feel the same or less pressure, but 2/3rds is a significant cohort one way or another.
39% of consumers intend to reduce their overall Christmas spending on food, presents and socialising this year.
These are – of course - intentions, but again it indicates a sense of pressure. 38% ‘inter to maintain spending at 2012 levels and 20% intend to increase it.
Here’s another stat, ‘Almost four in five of those surveyed said that the new property tax was “a key cause of extra financial hardship this Christmas’ while ‘nearly three quarters of those surveyed cited rising health insurance costs as the main cause of their financial strain’. How that maps onto the population at large in relation to home ownership (and therefore applicability of the LPT), and private health insurance is another question.
One in three blame job losses for their disimproved finances.
Retailers had hoped that an earlier budget this year might boost spending during the festive season. however, an October budget, rather than the traditional December date, appears to have had little impact on spending behaviour, the report shows.
Which seems a bizarre illogical line. And this is admitted by the report:
‘The earlier budget has fooled few into thinking they have more to spend; instead it has probably just underlined the fact that they have less.’
Okay, the stats seems a bit all over the place, what was the sample size, how representative was it, and so forth, but… the broad thrust of an economy with little appetite for borrowing or spending is clear.
And that would seem to ring true from other means of assessing these matters. According to FinFacts, the volume of retail sales were up 0.5% in September of this year, was down 1.6% in August, and down by 0.2% in October. According to Reuters retail salves feel by 0.9 per cent in the year to October. As it happens Constantin Gurdgiev has an entertaining post on how volume of retail sales is completely detached from surveys of consumer confidence here.
He argues that consumers are ‘claiming that which they do not practice… patriotic duty to be optimistic?’. Perhaps, but perhaps an indication that the rhetoric of government and of much of the media of a recovery is being internalised rhetorically but not in actions by the electorate.
Where is the surprise there though? To quote again the Coyne report, if the fact is that people have less to spend they’re not going to spend that which they don’t have (and it is telling that the report notes the appetite to borrow is now limited to 20% or so and that mostly using credit cards).
BTW Gurdgiev notes that retail sales activity is now at the level last seen in 2005. Quite some fall. And another ‘austerity’ budget ahead? Yet only this week both IBEC and the government appeared to point to increased general economic growth. If so it appears unlikely that it will be on the back of significantly increased consumer spending…
And let’s note that Cliff Taylor himself in the SBP references precisely this dynamic when he points to the extraordinary gap not between volume of retail sales (which he quotes someone in the supermarket business saying were still this December ‘flat as a pancake’) and consumer confidence, but even more strangely overseas investors. The point being that the latter are entranced by Ireland.
As he says himself, though not in quite this way, something odd there.