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.