Recovery in consumer confidence could be ‘dead cat bounce’

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Confidence has jumped by six points to -30 for June as lockdown restrictions began to ease, research firm GfK’s index shows.

All five of its consumer confidence measures increased. Shopper’s view of the general economic situation over the next 12 months had the biggest uptick, rising by nine points to -48.

Joe Staton, GfK’s client strategy director, said: “We have a six-point uptick in the overall index score with all measures up and particularly strong increases in future perceptions of personal finances and the economy.

“But we still have a story that’s about negative numbers so it’s too early to say that consumers are moving on from the Covid-19 crisis.

“The initial fall we announced on 6 April (from -9 down to -34) was the biggest ever since this survey’s origins in 1974. You have to go way back to the 1979 oil crisis to find anything that comes close.

”This latest improvement may be misleading. Consumers appear to be confused and some are not sure what to think. Yes, we have seen queues as some shoppers return to battered high streets. But with economists warning that the post-lockdown upturn might not restore GDP to pre-Covid-19 levels, and with the labour market set for more job losses, we have to question whether we are seeing early signs of economic recovery or that infamous ‘dead cat bounce’. Most bets will be on the dead cat.”

Non-essential retail stores in England were allowed to reopen with social distancing and other safety measures in place on 15 June.

It was announced yesterday that high street shops will be allowed to reopen in Scotland from 29 June.

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