Consumer confidence high-income earners plummets

In the first quarter of 2008, consumer confidence was considerably lower than one year previously. The mood among consumers in the highest income bracket dropped more rapidly than among low-income earners. Yet, optimists still outnumber pessimists in the high income strata.

Consumer confidence high incomes plummets

After the second quarter of 2007, the Dutch consumer confidence index started to drop dramatically, but the decline was not evenly spread across all groups of consumers. The decline was most obvious among people who are usually optimistic. In the first quarter of 2008, the confidence index dropped by 26 points among high-income earners relative to one year ago. The decrease among people living on low incomes was less dramatic. Their confidence index dropped by 16 points.

Consumer confidence in decline, 1st quarter 2008

Higher incomes remain optimistic

In the first quarter of 2008, pessimists outnumbered optimists. In most groups, at any rate. In the group of high-income consumers, optimists still outnumbered pessimists. Among employed people, optimists and pessimists balanced out. Being employed or not and income bracket are the most decisive factors for consumer confidence. Gender, level of education and age appear to be less important factors.

Consumer confidence by labour participation and income position, 1st quarter 2008

Opinion on economic climate rapidly deteriorating

Consumer confidence is based upon two component indicators; consumers’ opinions on the economic climate in the Netherlands deteriorated most. The indicator performed best early 2007, but subsequently dropped to -17. The decline coincided with the turmoil in the banking world and on the stock exchange and the economic downturn in the United States. The trend for index willingness to buy was much more moderate.

Consumer confidence

Jan-Willem Bruggink