Global consumer confidence has reached an all-time low, according to the Nielsen Global Consumer Confidence Index [download]. Thrifty habits being formed during the downturn will carry over into the recovery.
In the past six months, the index has plummeted to a record low 77 points from 84 points. The catalyst: Latin America, Russia and other emerging nations are now feeling the full effects of a recession that began in the United States, officially, in December.
Though consumer anxieties about the economy take many forms, the most widespread fear centers on job loss. For the first time in the Nielsen survey, it was global consumers' top concern, ranking No. 1 in 31 out of 50 countries surveyed.
Six months ago, only 9 percent of respondents cited job security as their primary worry. Now, nearly a quarter (22 percent) indicated they were more worried about going without a paycheck than over issues like work/life balance and the economy overall.
“With global redundancies affecting every industry, the economy and job security have eclipsed all other concerns in life today,” said James Russo, Vice President of Global Consumer Insights at The Nielsen Company.
Declining confidence has changed spending habits, with 70 percent saying they have taken steps to save on household expenses. Purchases of new clothes and out-of-home entertainment are the biggest casualties, with 56 percent and 53 percent of respondents cutting spending in those areas respectively. Forty-five percent have cut down on takeout meals, and 41 percent have switched to less expensive groceries.
Even when the economy improves, 40 percent will continue to try to save on gas and electricity, down from 45 percent economizing in that area now. And more than 20 percent will continue to look for less expensive groceries, cut down on takeout meals and buy fewer new clothes.
In contrast to global worries, the confidence of U.S. consumers dropped only slightly, to a score of 80 from 82 and 83 for the second and first halves of 2008, respectively. (For the sake of reference, overall U.S. consumer confidence indexed at 100 during the second half of 2007.)
The modest U.S. decline may be a harbinger of better times. “We may be at, or at least very near, a bottom in this economic cycle,” Russo said. “Specifically in the U.S., while [consumers are] clearly adjusting their spending and savings, with 40 percent stating they are paying off debts and putting into savings. Americans are increasingly optimistic.”
Indeed, nearly 20 percent of Americans polled predicted an economic recovery within the next 12 months. Internationally, nearly one in five (23 percent) said their countries will emerge from the recession within a year. The Vietnamese and Indians made this prediction most frequently, with response rates of 60 percent and 56 percent, respectively.
Despite consumer confidence falling overall, the survey revealed interesting disparities among respondent nations. Consumers in Indonesia, Denmark and India seemed to be the most optimistic, with confidence ratings of 104, 102 and 99, respectively. Still, 77 percent of those polled across the globe indicated their homelands were in recession, up from 63 percent who said the same thing six months ago. Surprisingly, 65 percent of Chinese respondents denied there was any recession in progress at all.
“While China’s economy has undoubtedly slowed, February retail sales are still 15 percent up on last year and many Chinese consumers now believe the next 12 months could be a good time to go back to investing in stocks and property,” said Chris Morley, managing director, The Nielsen Company China.
Nonetheless, the weight of currency devaluations, weak export markets and falling commodity prices caused emerging markets like Russia (down 29 points to 74), UAE (down 21 points to 89) and Brazil’s (down 15 points to 82) to turn in consumer-confidence figures that had plummeted significantly. Consumers were the most pessimistic in South Korea, with consumer confidence score of 31, Japan (42) and Latvia (48).
Perhaps the survey’s most telling finding was that Latin America has seen its confidence shaken. “Six months ago as developed markets hurtled towards the epicenter of a global recession, Latin America was the world’s most optimistic region,” Russo said. “However, it hasn’t taken long for the tentacles of the global recession to reach them.”
The Nielsen Global Consumer Confidence Index, compiled twice a year, tracks spending habits and concerns among 25,420 Internet users across 50 countries. Respondents were surveyed between March 19 and April 2.
Download the report.