Has consumer pessimism peaked?

September 04, 2008
Written by CNW Newsgroup
According to a Harris Decima poll, consumers may not necessarily be more optimistic today, but their pessimism of a few months ago is declining. The latest poll reveals that:

- The overall index of Consumer Confidence rose slightly in Canada, in the period from May through August. The index is based on five specific questions which probe sentiment about current and future
economic conditions.

Several of the five components that make up the index showed statistically significant shifts during the last few months:

- Pessimism about the economic outlook for the coming year dropped from 38 per cent saying things would be worse to 32 per cent. A smaller drop was recorded in pessimism about the five year outlook, from 46 per cent to 43 per cent expecting deterioration.

- The number of people who say they expect their personal financial situation to deteriorate in the coming year also slid by 3 points, from 20 per cent to 17 per cent. The number of people who say they are worse off today than they were last year, held steady at 24 per cent.

- The one negative movement was recorded on the question of whether now is a good time or a bad time to make a major purchase. Those saying it is a "bad time" rose marginally from 41 per cent to 42 per cent.

- While pessimism has declined, it has not yet been replaced by growing optimism. All five indicators showed no statistically significant gains in optimism, meaning growing fear in May has shifted into
growing uncertainty in August.

- Regional variances in consumer confidence remain interesting. This time last year, Canadians living west of the province of Ontario, had a confidence level that was 10-points higher than their eastern
counterparts. Today, east and west confidence levels are identical.

According to Harris/Decima president Bruce Anderson, "These patterns suggest that Canadians have anxieties about the economy, but are resisting becoming too fearful. The fact that 17 per cent think they will be worse off next year, and 25 per cent think they will be better off also is continuing evidence that most people are not seeing the wolf at the door..."

Bill Chornous, vice-president and investment strategist at Investors Group said, "With the recent decline in the price of oil, the prospect of lower gas prices may have reduced some of the price concerns of Canadian consumers. The influence of these price declines is reinforced by the uniformity of responses and consistent confidence levels across the country. This also explains why although optimism is not on the rise, pessimism is now declining."

Each week, Harris/Decima interviews just over 1000 Canadians through teleVox, the company's national omnibus survey. These data were gathered August 7-17, 2008 for a sample of just over 2,000 respondents. The poll's margin of error is 2.2 per cent, 19 times out of 20.


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