Friday, February 6, 2009
Category:
Finance News
The final consumer credit report of 2008 revealed that confidence dropped from 51 to 47 points during the month of December.
On the whole, the dominating index factor remains to be labour market confidence and, with news of struggling retailers and job losses within the motor industry, outlooks may be affected.
Irrespective of this, a sharp Spending Index increase was noted in December, indicating that consumers feel that it is currently a suitable time to purchase household items such as fridges and televisions. Discounts leading up to Christmas would appear to have improved confidence. However, believing that now is the time to buy does not automatically dictate an eagerness to spend hard cash.
The number of people who feel that this is a good time make household purchases increased from 28 percent to 41 percent during December. In addition, there was a slight increase in confidence to make more expensive investments such as houses and cars. Consistent with these statistics, was a 7 percent reduction in the number of consumers that do not believe this to be an appropriate time to make significant purchases. For some, this may be due to falling property prices and the subsequent anticipated improvement in affordability.
Consumers now seem to be acknowledging the effects that the ever-deteriorating economy will have on their household income. In December, the number of people who believed that their income would be lower six months down the line increased from 16 percent to 19 percent – the most noteworthy variation for more than twelve months. This is one of the first indications that consumers are now recognising the difficult times ahead as a result of the struggling economy.
Thoughts and feelings on the challenging economic climate remained dismal throughout December, with 49 percent expecting the situation to be worse in six months time. Pessimism also proved to be rife where the labour market is concerned, with 63 percent being under the impression that employment opportunities will be scarce in six months time. This marks a 4 percent increase on the previous month.
A noticeable improvement in house price expectations was apparent in December, with consumers now expecting prices to reduce by 4.9 percent during the course of the next six months. This figure stood at 5.4 percent in November.
Fionnuala Earley, Nationwide's chief economist, commented: "Consumers' confidence fell sharply in 2008, driven mainly by their sentiment about the economic and labour market situation. As the UK enters recession it is likely to be some time before we see confidence returning to levels seen in 2007. However, we are starting to see signs that consumers are preparing for the challenges they may face in 2009 and this is likely to become more evident in the coming months as people take stock of how current and future economic conditions may impact on their personal circumstances."
..........................................................................................................................
Homeowners who took advantage of heavy discounting on the high street in the lead up to Christmas, and who used credit or store cards to make their purchases may wish to consider using a secured loan to
consolidate their credit. One of many options for consolidation, a secured loan could tie up all those debts into one affordable, monthly repayment. This new monthly repayment may even turn out to be lower than existing outgoings. Repayable over a term to suit the borrower from 5 to 25 years, it should be remembered however that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
