January’s consumer confidence measure often rises as people
feel it is a good time to spend in the sales. In addition the New Year can also
improve optimism about the future. This January both factors were absent as a
mood of deep pessimism among consumers pushed the GfK CCB to the lowest (-29)
since March 2009, and to the biggest monthly fall since November 1994. All five
of the sub-measures making up the CCB worsened on the month.
December’s surge in the spending climate measure as more
people considered it a good time to make major purchases of household goods (up
from –17 to –7) was more than reversed in January – down 22 points to –29 and
accounted for nearly a half of the month-on-month fall.
A growing pessimism about the economic outlook – and a
steady deterioration in the outlook for personal finances also contributed to
the slump in the headline measure.
The measure of the expected state of the economic position
in the next 12 months fell to –30, down 7 points on the month and 28 points on
a year ago. It is the lowest level since March 2009.
Compared to a year ago people’s optimism about their
personal finances has ebbed away as the reality of tax rises and spending cuts
takes hold. The expectations measure of personal finances is down 16 points to
–12, compared to +4 in January 2010.
Both current measures of the economic situation (down 3
points to –54) and personal finances deteriorated (down by 2 points to –18),
although by less than the other measures.
With inflation and unemployment expectations pushing the
JGFR Misery Index to a decade high (142 and above the previous level in the
midst of the recession, 141 in July 2008), the outlook for the economy is very
depressed with a double dip likely.
Only a surge in business investment resulting in more jobs
becoming available may forestall a double dip together with government
reassurances over fuel prices and more measures announced to aid growth. At the
same time industrial and political unrest planned for the spring will further
add to the deteriorating outlook
A full picture of the mood of consumers is published each
month in the JGFR UK Consumer Confidence Monitor – for details contact j.gilbert@jgfr.co.uk or ring 0208 944
7510 / 07740 027968