We are constantly scanning the horizon for clues about how businesses and shoppers are feeling. Not only does this allow us to take a view about what are good and bad marketing investments at any time, but it allows us to make sure that our marketing campaigns and programs chime with the public mood. Nothing is more off-putting for buyers than to face advertising messages that are pessimistic or optimistic in a way that jars with their own view of the world.
This week there are two reports out in the UK that give a slightly conflicting view. Lloyds TSB have published their spending power report which indicates that consumers are £10 per month worse off when compared to the same month last year. With earnings fall in real terms and significant rises is utility bills, households are feeling the squeeze and there is less cash available for discretionary spending.
On the other hand, the Markit Household Finance Index shows that consumers are at their least downbeat about the economic outlook since 2010. The Markit survey is quite like the purchasing managers index, which they also produce. It measures expectations of future economic wellbeing as perceived by the household.
What this indicates is that while inflation is slowing and price rises are slowing, in many ways these have not yet fed into household budgets. People can see price drops in some parts of their spending and over several quarters that will boost their disposable income. However at present they are still worse off than they were 12 months ago. This is also in line with the forecast of Mervyn King, who said that this year would oscillate between growth and stagnation. Consumer sentiment might be improving, but the daily realities or earning drops and the threat of unemployment will never be far from people’s minds. It is unlikely that we will see any change in this outlook any time soon. In fact any chaos in Euro-land could weigh heavily on a fragile improvement in sentiment.