28.07.2010 11:04
Consumer sentiment continues to improve, according to yesterday's Gallup Consumer Sentiment Index. The Consumer Sentiment Index has risen by a further 6 points to its post-crisis record of 67.1.
The index measures consumers' expectations concerning the economy and the labour market: when it is below 100 points, pessimistic sentiment outweighs optimistic sentiment. It has remained below 100 continuously since February 2008 but has risen for the past four months, indicating that Icelanders are more upbeat than before and more certain that the worst is over and better times on the horizon. This trend accords with a number of indicators suggesting that the recession has indeed hit bottom: the labour market appears to be rallying, inflation is abating, the króna has appreciated, interest rates are down, real wages have risen, and GDP growth has turned positive once again.
Expectations for the future noticeably upbeatAll of the subcomponents of the Consumer Sentiment Index rose between June and July, and all of them have hit post-crisis record highs. For the first time since spring 2008, expectations about the economic and employment situation six months ahead have broken 100 points, indicating that optimists now outnumber pessimists. The popular assessment of the current economic and labour market situation is far less encouraging, however, with the subcomponent measuring 14.6 after rising by 4.2 points month-on-month. Icelanders are clearly far less sanguine about the current situation than about the future, yet this subcomponent, too, is much higher than a year ago, when it measured a paltry 6.6. As before, males are more optimistic than females, and the younger generation are more upbeat than their elders. In the past month, optimism has increased much more among respondents with higher education and income than among those with the lowest wages and the least formal education.