'Confident' consumer economy on the up
The Irish consumer economy turned a corner in 2014 after five years of recession, and is now recovering steadily, a new report reveals today.
More people expect their household finances to improve in the coming year than deteriorate - a change crucial in attitudes, apparent for the first time since the downturn.
Consumer spending also contributed to the growth of the wider economy in 2014 for the first time since the crash in 2008.
Increasing employment is at last filtering through into more disposable income, and household wealth is rising in line with property prices.
The feelgood factor is continuing into this year, with the latest consumer confidence figures showing the first quarter of 2015 to be up again, to a level significantly above that of neighbouring countries.
The positive outlook is presented in the latest Consumer Market Monitor (CMM) published today by the Marketing Institute of Ireland and UCD Michael Smurfit Graduate Business School.
The report, which has been produced since 2009, points out that the consumer economy is now recovering rapidly, with all types of spending increasing significantly.
However it notes that there is regional variation, with the greater Dublin area recovering more quickly and more dramatically than the rest of the country.
"However, the other regions are catching up, with expectations of a broadening recovery as time goes on," the report said.
The Central Bank has said that domestic demand is now expected to make a larger contribution to growth than previously thought.
Mary Lambkin, professor of marketing at the Smurfit School of Business, said that the country is back on the path of growth, albeit from a very low base.
"Consumer spending accounts for over 60pc of GNP in Ireland and is a critical factor in driving recovery in the economy," Prof Lambkin said.
"Consumer spending is affected by the combined influences of how much money people have available to spend coupled with their confidence in spending it.
"Disposable incomes are at last beginning to show modest growth as a result of jobs growth.
"This, coupled with greater availability of credit, is leading to accelerated spending on many categories of goods and services."
The Consumer Monitor Report is a compendium of quarterly data from a range of sources including the CSO, Eurostat, the Central Bank, the European Commission, and other sources. It relies on a model of consumer behaviour that sees economic variables such as income levels, taxes, interest rates and exchange rates influencing consumer confidence which, in turn, influences consumer behaviour.
Ms Lambkin said its purpose is to give a clear picture of the impact of the various pieces of economic data that are released each quarter.
"We gather up all the individual bits of information, and what we're trying to see is what do they add up to ... what is the composite figure?" she said.
"You get all these soundbites of information, but you can never see a long-term picture of what is really happening."