US Consumer Confidence Dips, Plateaus in UK

03 June 2004

Two separate surveys from opposite sides of the Atlantic suggest that Joe Public is increasingly uncertain of the way in which the economic cookie is poised to crumble.

• Stateside, the University of Michigan's closely watched Index of Consumer Sentiment sank in May to 90.2 from the previous month's 94.2. It also trailed the 92.1 recorded in May 2003.

Another key measure -- the Expectations Index -- fell from 87.3 in April to 81.6 in the May survey, significantly down on the same month last year when the index basked nearly ten points higher at 91.4, thanks to the [as then perceived] rapid end to the war on Iraq.

The disappointing figures may well reflect consumer attitudes to inflation, currently predicted to hit 3.3% over the forthcoming twelve months.

But Richard Curtin, director of the University's Surveys of Consumers believes the factors underlying this apparent downturn are temporary and expectations over five years are more optimistic.

Opines Curtin: "Rather than a shift toward pessimism, the data show a continuation of the longstanding trend of mixed evaluations of the economy, only this time consumers hold more favorable employment expectations and less favorable inflation and interest rate expectations, the opposite of what occurred during the past few years."

• UK consumers are likewise marking time. The Consumer Confidence Survey by Martin Hamblin GfK on behalf of the European Commission reported an unchanged overall score of minus 2 for May -- one point higher than the same period last year but above the annual average.

As to their personal financial situation, consumer sentiment is virtually unchanged. Perceptions of the last twelve months remain at minus 1 while expectations for the future slipped by one point to +9.

The general economic situation in the country is seen to have improved on an ongoing basis since September 2003 but Britons now believe it has stalled (minus 18). However, this is way ahead of the same period last year when the index stood at minus 30.

Expectations for the next twelve months (on a rolling basis) have consistently fallen since January -- in May they dropped two more points to minus 14.

The Major Purchases Index registered +13 in May, four points lower year-on-year (+17) and below the annual average. Perceptions of whether now is a good time to save remain at similar levels to the last three months, falling one point to +15 in May.

Data sourced from: Daily Research News Online; additional content by WARC staff