Thursday, 27 November 2008

November Consumer Confidence "Plummeting"

Consumer confidence, released today by Statistics Finland, are the worse on record.

"Consumers' confidence in the economy continued to weaken in November. The consumer confidence indicator stood at -4.5 in November, having been -0.2 in October and 8.1 in September. Confidence in the economy was also clearly weaker when compared with one year ago and with the long-term average."

"Consumers' expectations concerning Finland's economy in general were also the gloomiest since the beginning of the 1990s

Who would have though to see a deterioration occuring so fast? I suppose no one...that's the scary thing. Although in this blog, it was warned already a year ago that the economical situation will deteriorate, unemployement will rise, inflation will plummet, housing price will correct.

There were clear signs. Housing construction, and permit started to decline already last autumn. Inflation started to reach a peak, signs of an end of a cycle. The other big sign was the fact that the central bank in the U.S. started to cut interest rates amid the worse financial situation since 1930.

It's worth to note that the fear of being unemployed has shoot up quite drastically. This will undoubtedely translate into higher saving rate and lower consumption. That will make the latest measure from the government - income tax and VAT cut - ineffective. Now the country will have to solely rely on export. It means that the faith of the Finnish economy depends on the state of other economy and their stimulus plan.