Consumer confidence defies the odds

CONSUMER CONFIDEN CE has bounced back in the fourth
quarter by 4 points to 22, one
point shy of the all-time record
of 23 in the first quarter of
the year.
This against the background
of the new National Credit Act
and steadily higher interest
rates eroding the household
ability to consume. GDP
growth in the third quarter
was also up a few decimals,
with the annualised growth so
far this year pegged at
4.7% and the year-on-year
averaging 5.3%.
“But both indicators
did show some underlying
weakness,” says FNB chief
economist Cees Bruggemans.
“Retailing, wholesaling and
manufacturing (a quarter of
GDP) recorded steadily slowing
output growth in 2007,
indicating that the tighter
macro policy stance is most
certainly having an effect.
“Consumer confidence
recorded less buoyancy among
higher income groups and
whites, presumably the most
indebted.”
But Bruggemans points
out that the economy has
achieved a positive growth
momentum. “And while this
year agriculture recorded
mostly a negative growth
rate, that could change next
year, going by all these
good widespread rains and
full dams.”
In terms of consumer
confidence generally, he says
it has for three years recorded
historically elevated levels, but
has for now lost most of its
historic jerkiness and seems to
have difficulty coming down.