How has consumer sentiment changed over the last 10 years and what is the likely impact on consumer spending? Find out the results of our 2018 survey below.
Our consumer sentiment tracker was first commissioned in April 2008, after we had seen the first signs of an impending economic slowdown, but before the global financial crisis had taken hold. We have continued to ask the same question to a nationally representative sample of 2,000 adults every few months since then, and used this to develop a picture of consumers today, as well as how they feel about their financial prospects going forward.
So, despite the recent negative indicators, both politically and economically, this may be a sign that consumer spending is more resilient than some observers expect, potentially buoyed by low unemployment and relatively high wage growth. In the critical run-up to Christmas, a cautiously optimistic consumer will be a sigh of relief for retailers already facing other challenges such as increased online competition, business rates and Brexit-related costs.
Our latest survey, undertaken in September 2018, shows that just over a quarter of Britons think they will be better off in the next 12 months, marginally higher than the proportion who think they will be worse off. (see below)
Although not as optimistic as in late 2015 and early 2016, this shows an improvement in sentiment compared with last year and the beginning of 2018, and this might reflect the continued low levels of unemployment and the highest wage growth in almost a decade.
Younger people, in fact all age groups under 45, continue to show a positive balance of opinion, with only over 55s and socioeconomic group E (benefit dependent, including state pensioners) consistently negative.
In the critical run up to Christmas, this gives us some confidence that consumer spending will hold up, at least in the short term. Indeed, overall consumer sentiment has remained remarkably resilient in the past four years, and continues to be stronger than when we started our survey in 2008.
Looking back at our surveys over the last 10 years, a number of consistent themes have emerged about the British consumer:
Not surprisingly, our tracker also correlates strongly to real household expenditure (+0.8); we believe it is a good predictor of future consumer spending patterns, with declines in consumer spending (e.g. in 2009 and 2011) following low points in sentiment, and the relative consumer spending boom in 2006 following on from sentiment turning positive for the first time in November 2015.
We asked consumers how they felt their household situation had changed since 2008, and how they thought their fortunes would evolve in 10 years’ time.
Looking back, more people thought they were better off compared with 10 years ago than worse off. Interestingly two cohorts most positive about their historical fortunes are pensioners, echoing the reasons we cited above, and millennials, perhaps contrary to what’s talked about in the press: indeed, over half of 25-34 year olds think they are better off than they were 10 years ago, and fewer than a quarter think they are worse off. The only age group who think they are worse off on balance are the baby boomers (55-64 year olds).
Looking forward 10 years, the age delineations are more straightforward: the younger the respondent, the more optimistic their outlook, with the clear majority of under 45s think that they will be better off over the next 10 years. Whether or not they prove to be correct, we will continue to report back on, as we look forward to continuing our consumer sentiment tracker for another 10 years to come.
We asked a nationally representative sample of 2,000 adults the question “Thinking about your disposable income (money remaining after household bills, credit cards, etc.), in the next 12 months do you expect that your household will be better off or worse off?” We then calculated the balance of opinion by subtracting the percentage of people who thought they would be worse off from those who thought they would be better off.
We have continued to ask this same question every few months since April 2008, and the results have given us insight into the pulse of the nation, and proven to be a good predictor of future consumer spending patterns.