Monday 16 September 2019

Paul Moran: 'Is this as good as it gets for us all now?'

A softening of optimism in the latest consumer sentiment poll suggests we might be leaving the good times

'What happens between now and October 31 will have massive implications on our financial mood.' Stock photo
'What happens between now and October 31 will have massive implications on our financial mood.' Stock photo

Paul Moran

As part of our annual Kantar/Sunday Independent consumer sentiment poll, conducted late last month, we sought to find out how the population is feeling financially, and what their sentiment is for the future. Some interesting but nuanced shifts are apparent.

The timing of interviewing on this poll is critical. Most interviews were conducted before the election of Boris Johnson as PM across the water, and the unveiling of his subsequent bellicose approach to Brexit and the backstop. So, we cannot use that as a direct excuse.

However, Brexit still does provide the backdrop to this poll, and undoubtedly sets the mood music to our sense of what lies ahead.

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First off, how do we think we have fared over the past 12 months? Ordinarily we tend to focus on looking to the future; what is gone is gone. But the findings today should be concerning, particularly in Government circles. When we asked how people feel they are financially compared to this time last year, the number of people feeling they are less well off has increased five points to 25pc.

One in four feels their financial status has reversed, at a time of peak economic activity, and represents a three-year high. We know booms don't last forever, and that this boom, arguably at its apex, still isn't resonating with many. This is a worry. Those most likely to be feeling the pinch are older, and C2DEs.

Looking towards what lies ahead, on the face of it, the headline figures appear stark. Last year when we posed the question how people would feel financially when looking towards the future, 35pc said they thought they would be better off, versus 18pc stating the opposite; a net difference of +17 percentage points.

This year, when posed with the same question, the respective figures are 22pc feeling upbeat versus 21pc feeling more melancholy. A net difference of just +1pc. So as a nation do we feel we are facing a financial Armageddon? It is not as simple as that.

It seems we are becoming more cautious in our outlook. The proportion of those believing they will be no different has increased sharply - nearly half (48pc) feel they will be in the same position next year, up seven points, with a further 9pc simply not knowing what the future holds (up four points).

Brexit, and all the uncertainty that it entails, obviously looms large. It is the economic headline show in town. But other indicators point to a softening of our optimism. The economy cannot keep on growing at the pace it has been forever. We are reaching near full employment, which ironically can create its own pressures. Ongoing and potential international trade wars do not help our mood. A continuing focus on our corporation tax regime can also cause jitters.

In effect, it may well be that this is as good as it gets. Perhaps we are simply being pragmatic about our outlook but are not being overly dramatic.

Another factor to consider is that we are comparing ourselves to the previous two years, when optimism was at an 18-year high. Of course, this period encapsulates the recession brought on by the banking crash, but even still, we do need perspective.

Turning back to Brexit, what happens between now and October 31 will have massive implications on our financial mood.

Looking at the potential winners and losers over the next 12 months, there are some interesting, if not sometimes predictable, trends. Those highest up the socio-economic ladder, ABs (those in senior professional positions) tend to be less worried about any economic storm clouds looming: 31pc of them feel they will be better off next year, versus just 13pc disagreeing. Younger cohorts are also more buoyant: 31pc of 18-34-year-olds view the future positively, with less than half (15pc) in disagreement.

Regionally there are little differences, but the exuberance that we have seen in the past in Dublin, the cockpit of the economy, has dissipated. They have a net positivity of +3, compared to +46 a year ago. Across the board, the fizz that was evident over the past few years seems to have seeped out of our psyche. Whether this is temporary or not will largely be dictated by circumstances arguably beyond our control.

Looking however at the situation from a broader macro-economic level, there is a sense that we are reaching a turning point. Just one in five of us (21pc) feels the economic situation will improve over the next 12 months, compared to 39pc saying it will remain the same. But, the proportion of those saying things will disimprove has nearly doubled - a third, or 32pc, think this will be the case, compared to 17pc a year ago.

Of course, we cannot quantify what that disimprovement will look like; coupled with the realism of our personal financial sentiment, it may well be that this statistic is simply signposting towards our pragmatism.

Yet, we remain by and large a population content in our own skin. When we ask how consumers gauge their personal mood (putting to them five positive and five negative sentiments), the results are generally sunny - 69pc opt for a positive attitude, versus 31pc veering towards the opposite.

While there has been some erosion in our confidence (previously this happiness rating was at 76pc), it is still well within bright territory, and is driven by nearly one in four (23pc) expressing themselves to feel optimistic.

It would seem that as a nation we know that there are challenges ahead, but we generally feel comfortable with how to deal with them.

Paul Moran is an associate director with Kantar

Sunday Independent

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