In particular, consumer views on the economy over the next twelve months have been more negative than a month ago. On the other hand, consumers were slightly less negative in May about their financial situation both over the past twelve months and over the next twelve months. According to De Jong, issues such as high interest rates, falling house prices and the war in Ukraine play a role in consumer thinking.
‘Consumers have become more negative about the economic outlook, but actually less negative about their financial position and even slightly less negative about their willingness to buy. Consumer spending has actually been much stronger over the past year than low consumer confidence suggests.’
“Consumers have become more negative about the economic outlook, but actually less negative about their financial position”
According to De Jong, this apparent contradiction is due to the unusual circumstances. The economy received a major shock from the pandemic and contracted by 0.7% “pretty firmly”. At the same time, unemployment is falling and the labor market is tightening. De Jong calls it a wonderful combination. “Meanwhile, wage increases are also outpacing inflation, which may explain why consumers are less negative about their financial position.”