Consumer sentiment in April reached its highest level of the “Memorandum period” after showing a rapid improvement relative to March. The relevant index climbed above 70 points, for the first time since August 2010. The indices tracking expectations concerning the future of the economy rose significantly, while in contrast, those relating to personal financial situation improved only marginally, which indicates that although citizens expect the economy to recover, they are not convinced that this will be accompanied by an amelioration of the financial situation of households. The further improvement in consumer confidence, which has been observed since January 2014, may have an impact on political developments. The direction of the latter, however, i.e. whether they will ultimately favor the government or the opposition, remains largely unforeseeable.
The Consumer Climate Index – CCI (72) hit a new historic high for the period since the signing of the Memorandum (5/2010-4/2014), registering a substantial increase (+6.5 points) relative to the previous month. Both component indices showed a rapid improvement. The Current Economic Conditions Index – CECI (51.4, +5.9 points relative to March) reached its highest level since August 2010 (54.5), while the Consumer Expectations Index – CEI (85.7, +6.9 points relative to March) rose to its historically highest value of the “Memorandum period”. More generally, the Consumer Climate Index has shown an upward trajectory for the past eight months (9/2013-4/2014), gaining a total of 20.3 points (from 51.7 points in July 2013 to 72 points in April 2014).
Propensity to buy (75.4) recovered strongly (+10.6 points) in the space of just one month. Short-term expectations for the economy (80, +9.2 points relative to the previous month) reached the highest level of the past 49 months (4/2010-4/2014). At the same time, long-term expectations for the economy (114.6, +10.6 points relative to March) registered the highest value of the period since the signing of the Memorandum (5/2010-4/2014), remaining for the fifth straight month above the “psychological” 100-point barrier. In contrast with the impressive rise of indices tracking the economy as a whole, those relating to personal financial situation showed only a marginal increase. Assessments of personal financial situation (27.4) reverted to November 2010 levels (27.6), rising by 1.1 points relative to the previous month. Expectations of personal financial situation (62.3, +0.8 points compared to March) for the second consecutive month hit a new high for the Memorandum period. It is worth noting that this particular index continued its upward trend for the sixth successive month (11/2013-4/2014), making total gains of over 16 points (16.4).
Citizens’ expectations for unemployment improved markedly. The percentage of those expecting unemployment to fall (19%, +5% relative to March) reached the highest level recorded since elections in 2009 (34% in October 2009). Expectations for saving and inflation showed only slight changes. Just 1 in 10 (10%, -2% compared to the previous month) anticipate a decrease in prices in the coming 12 months, while 7% (+2% relative to March) consider it likely they will be able to save some amount of money in the year ahead.
Consumer Confidence Index & voting intentions for parliamentary elections
Of particular interest is the correlation between the Consumer Confidence Index and voting intentions for the “new” two-partyism (New Democracy, SYRIZA) in parliamentary elections during the current election cycle. More specifically, the coefficient of correlation between voting intention for ND in the present month and the Consumer Confidence Index in the previous month is estimated at 0.52, while the corresponding coefficient for SYRIZA is 0.46. Moreover, the coefficient of correlation between the difference in voting intentions for ND and SYRIZA (the “gap”), and the Consumer Confidence Index is nearly 0.54. Consequently, the Consumer Confidence Index appears to constitute a “leading indicator” of voting intentions for both ND and SYRIZA.
The improvement in consumer sentiment which has been recorded, continuously, since the beginning of the year could, possibly, be considered a pre-indication of the cancellation of the steady – during the past six months (11/2013-4/2014) – lead in estimated voter support over ND. However, historical experience shows that a recovery of consumer sentiment does not necessarily work in the government’s favor. The most characteristic and relatively recent example was the marked improvement in consumer confidence recorded during the six months prior to parliamentary elections in 2009, from 67.8 points in March 2009 to 85.8 points in September of the same year. In that particular instance, the improvement in consumer sentiment was followed not by a second successive term in government for ND, but by an impressive victory for the then main opposition party (PASOK).
To conclude, in certain instances an improvement in consumer confidence may be due to citizens’ expectations deriving from the anticipated change of government.
