Consumers reining in their spending

IRISH consumers are slow to spend on anything except essentials because of the eurozone crisis.

They are also worried at the prospect of a double-dip world recession caused by the situation in Greece, according to the latest Credit Crunch Tracking Report from Red C.

It showed expectations for an improvement in the global economy are bleaker than at the onset of the recession, with almost 60% expecting the situation to worsen over the next six months.

However, consumers remain optimistic about the prospects for the economy and there is potential for increased spending on socialising and consumer goods if the eurozone problem is resolved.

More than 20% of those polled expect the economy to improve over the next six months, while almost half are confident that our economy will at least not worsen.

This contrasts sharply with a July 2009 poll, which showed that only 7% of Irish consumers expected the economy to improve.

There is a disparity between the expectations of men and women, while couples with children see medium-term economic prospects as bleak.

According to Red C, there have been significant declines in expectations for the economy among females and families.

“These groups are more negative than average,” say researchers.

While 54% of males expect the economy to have improved six months from now — a rise of two points since last June — only 37% of females feel the same way, a significant drop of 11 points over the past three months.

Fears of a worldwide recession have also hit expectations for both the housing market and job security. While about 55% of those polled in May 2010 expected an improvement in the housing market, that has now dropped to 38%.

The expectations for jobs growth show an even more marked decline. While 13% of those polled had high expectations for jobs in September of last year, that has fallen to 9%.

Similarly, the number of people hopeful of even a moderate improvement on the jobs front has also dropped. In June, 44% of people expected that the job market would either improve slightly or remain the same, but that figure is now down to 33%.

The recession has had a negative impact on consumers’ perceived quality of life, with one third claiming they are worse off than a year ago.

There has also been a decline in happiness since last year, with more people suggesting their energy and energy has declined.

However, 60% remain as happy as they were this time last year, with those over 65 registering a more positive outlook than they did in October 2010.