Consumer confidence fell in 25 out of 52 countries in Q4 2010 as hope for a global economic recovery evaporated at the end of last year, according to the latest edition of the Nielsen Global Consumer Confidence Index, which tracks consumer confidence, major concerns and spending intentions among online consumers. According to the survey, which polled more than 29,000 Internet consumers last November 2010, in many countries, widespread concern for unemployment, job creation, rising food and utility costs eradicated any expectation of sustained economic recovery.
“Global consumers ended 2010 more pessimistic than at the start of last year. As the immediate economic and financial reality remained fragile and with the lack of positive indicators throughout 2010 consumers were given a harsh reality check that full recovery is still a long way off,” said Dr. Venkatesh Bala, Chief Economist at The Cambridge Group, a part of The Nielsen Company. “The lingering impact of the great recession is further evidence of a new normal.”
The Nielsen Global Consumer Confidence Index at the end of 2010 remained unchanged from the previous quarter at 90 and finished the year two index points below the start of the year. Global consumer confidence in 2010 peaked in Q2 at 93 index points. Latin America was the world’s most optimistic region at 100 points (+6 points year on year), followed by Asia Pacific at 97 points (+6 points year-on-year). North America ended 2010 at 83 index points, (-2 year on year) and Europe was the world’s most pessimistic region at 78 index points (+2 year-on-year).
[click to enlarge]
Recessionary Woes Live On
“Global consumers – especially in the West, are bracing themselves for another year of flat to sluggish growth in 2011,” said Dr. Bala. “Job creation and employment numbers have fallen below expectation and even though many countries are officially out of recession, many consumers are still living – and expect to continue living – a cautious recessionary lifestyle which is restricting domestic spend and demand. Going forward, rising prices in several emerging markets such as China and India have to potential to dent consumer confidence and spending, especially if their respective governments decide to expand policy actions to combat higher inflation."
Forty-five percent of North Americans still expect the recession to last for another year, compared with 39 percent of Europeans and 19 percent of Asia Pacific consumers. “The U.S. jobless rate remains at the heart of the issue for Americans,” said James Russo, Vice President, Global Consumer Insights at The Nielsen Company. “While the jobless rate dipped a meager 0.3 points in December to 9.4 percent – its lowest level in 19 months – it has topped nine percent for 20 months straight, which is the longest streak on record.” U.S. Consumer confidence in Q4 2010 held steady from last quarter at 81points, just one index point away from its lowest level on record in first half of 2009.
No Spare Cash
In the last six months of 2010, the number of consumers with no discretionary income rose from 22 percent to 31 percent in North America, from 16 percent to 20 percent in Europe and from 10 percent to 15 percent in Latin America. “Consumers in all regions are feeling the financial squeeze more than any other time during the global recession. In addition to concern for global and national economic issues, consumers are also struggling with rising daily costs such as food, utilities, petrol and transport prices. In Q4 2010, consumers found themselves with less disposable income than at any other time and the number of cash-strapped consumers globally peaked for two consecutive quarters at 14 percent – the highest number on record,” said Russo.
What to Watch
“Consumers have weathered the worst of the storm, but the pragmatic behavior prevalent in 2010 will continue into 2011 as headwinds to growth persist,” said Russo. “Coping strategies will represent a combination of essential and discretionary spending, where the focus will be saving on gas and utilities, reducing spend on grocery, take-out, clothing and entertainment expenses. For emerging countries, consumers are focused more on discretionary strategies, such as reducing phone costs and spending less take away meals. For developed markets, basic and essential strategies like reducing grocery spend will dominate.”
For more, download the complete report: Nielsen Global Consumer Confidence Index.