Consumers and CEOs agree that the economic gloom is being overstated

31 May 2018

For many years, we have been conducting regular surveys on the mood and behaviour of consumers across the world. In the past, we’ve mined the data to answer fairly narrow questions about shopping habits. But with our 2018 Global Consumer Insights Survey (GCIS), we’ve reflected rising consumer power and global connectivity by widening the questions to look at overall consumer confidence.

The results – especially when set alongside those from our 21st Annual Global CEO Survey – are surprisingly positive. Despite the widely-publicised, recession-induced ‘new normal’ that’s been damping down consumer spending and corporate investment since 2008, the data shows both consumers and CEOs are very confident about the next few years.

Globally, one-third of consumers think the economy has improved since 2017, while a further 40% say it’s stayed the same. And our 2018 CEO Survey shows the biggest ever rise in optimism among business leaders over global growth. As you would anticipate, here in the UK the mood is more restrained, with 37% of consumers expecting the economy to deteriorate in 2018 and 40% expecting it to stay the same. However, spending intentions remain in line with global trends, with almost three-quarters of consumers in the UK and across the globe planning to spend the same or more than last year.

What will they be buying? Grocery emerges once again as the only category with a net number of people expecting to spend more, while most people say they’ll cut back on eating out and big-ticket items.

When we look at experts’ projections of global GDP and the confidence felt by consumers and CEOs, a gap has emerged. The International Monetary Fund’s latest update to its World Economic Outlook projects that global GDP growth will stay below 4% a year through 2019 – a far cry from the rates seen before 2008. Yet consumers and CEOs globally appear to be getting more confident, not less.

So, what’s happening? A closer look at our consumer research reveals a complex picture – including stark differences from country to country. Perhaps unsurprisingly, Asian territories tend to be the most optimistic, bolstered by consistently buoyant GDP growth in China and several emerging economies in the region. In fact, the top four countries expressing the most positive outlook for their national economies are the Philippines, Indonesia, China and Vietnam.

Meanwhile, those territories where consumers are the most pessimistic hail from a variety of geographic areas – South Africa, Malaysia, the UK and Hungary – implying that their economic concerns are specific to their national economies. Again, it’s little surprise that the factors affecting spending intentions in the UK are Brexit (70%), inflation (61%) and fuel and gas prices (50%).

Turning to our 2018 Global CEO Survey, the leap in confidence revealed by our research is unprecedented in the 20-plus years that we’ve been conducting the study. Asked whether they think global growth will improve, stay the same, or decline over the coming 12 months, 57% of CEOs say it will improve – a jump of nearly 30 percentage points from 29% the previous year, taking it to its highest ever level.

What’s more, unlike with consumers, the optimism among CEOs is distributed fairly evenly around the world. While consumer confidence is strongly rooted in Asia, 46% of our CEO respondents pick the US as the top location for investment globally. This confidence is predicated on a US market that has strong corporate profits, falling corporate income tax rates and unemployment at historic lows.

Significantly, UK CEOs have caught the positive mood. The proportion who are optimistic about the economic outlook has more than doubled to 36%, and 88% expect their own business to grow in the year ahead. This is despite concerns over the global trading environment and emerging technology issues, notably cyber security.

What does all this tell us? Essentially that consumers and CEOs agree the outlook is less doom-and-gloom than some experts are painting it. Companies selling to consumers should take this into account – because it means there’s still plenty of spending up for grabs.

Sue Rissbrook | Head of Retail
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