Consumer confidence in the Netherlands has plummeted from 15 to -1 in September. This is the largest drop ever measured. For the first time since the summer of 2006 there are more pessimists than optimists again. Not only are consumers more sombre about the economic climate, willingness to buy has also taken a knock. Consumers are mainly pessimistic about the future economic and financial situation. A substantial number of consumers also expect prices to increase in the next twelve months. They hardly expect unemployment to increase at all, on the other hand.
Consumer confidence, seasonally adjusted
Radical turnaround in feelings about the economy
In the space of just one month consumers’ opinions on the economic situation in the coming twelve months have gone into complete reverse. While there were still 16 percent more optimists than pessimists in August, in September the pessimists had a majority of 18 percent. Such a 34-point deterioration has never been measured before. Consumers are also considerably more pessimistic about the economic climate in the last twelve months.
Opinions on the economic situation in the last and in the coming twelve months together have fallen by no fewer than 28 points. This component of consumer confidence reacts quickly and violently to uncertainties and bad news about the economy. But the size of the drop is unparalleled. Only the fall in October 1998 comes anywhere near. As a result of the Asian crisis at the time, the opinions on the economic climate fell by 21 points.
Economic climate, seasonally adjusted
Fall in willingness to buy less drastic
Willingness to buy, the second component of consumer confidence, has also deteriorated, though less drastically than opinions on the economic climate. The net percentage of optimists is 3, down from 9 in August.
The willingness to buy indicator consists of questions on the financial situation of the own household and on whether respondents think it is a good time to purchase expensive consumer durables. Consumers are a lot more negative about their own financial situation in the last twelve months. The opinions on the financial situation in the coming twelve months have also deteriorated. Consumers are, however, only a fraction less positive about whether it is a good time to purchase expensive goods.
Willingness to buy, seasonally adjusted
The Consumer Confidence Survey was conducted in the first ten working days in September. Just before this period there were a several reports on the turmoil on the international financial markets as a result of the US mortgage crisis, decreasing purchasing power next year in the Netherlands and turbulence on the stock exchange.