With gas prices nearly a dollar lower per gallon than they were at this time last year, and nearly $2 lower than they were at their peak this past summer, it’s no longer an ordeal for consumers to go to the pump. In a better economy, this might greatly brighten their mood about economic matters in general. Alas, there’s an asymmetry in the way fluctuating gas prices affect the consumer mood. Early this year, before the financial markets had imploded and the labor market had seriously weakened, the steep rise in gas prices was enough to cripple consumer confidence. But now, the even-steeper decline in gas prices isn’t enough to cheer consumers as the stock market sinks and unemployment surges.
An Ipsos Public Affairs survey for the RBC Cash Index, fielded just after this month’s elections, gives a picture of how thoroughly glum the consumer mood is.
Even as they see the world at large going to hell in a handbasket, survey respondents tend to say things aren’t so bad closer to home. However, when asked in this current survey to rate the strength of the economy “in your local area” on a scale of 1 (very weak) to 7 (very strong), they were decidedly downbeat. Just 10 percent handed out a 6 or a 7, while 24 percent assigned a 1 or a 2. For comparison’s sake, the 6-or7 tally was twice as high in Ipsos polling a year ago.
There has also been a decline (though a less precipitous one) in the number of respondents who are upbeat about their own financial situation. A year ago, using the same 1-to-7 scale, 27 percent rated their own finances at a 6 or 7 and 16 percent graded them a 1 or a 2. In the new poll, the 6-or-7 cohort has fallen to 21 percent of respondents, while the 1-or-2 cohort has grown to 19 percent.
The one good thing to be said about the economy is that it has sunk far enough that significant numbers of people think it can only get better in the next six months. Time will tell whether that opinion (largely unshared by economists) is correct, but it at least adds some slight prop to consumer confidence. Eight percent of respondents said they think the economy in their local area will be much stronger six months from now, and another 25 percent said it’ll be somewhat stronger. Nine percent said it’ll be much weaker, and 15 percent said it’ll be somewhat weaker. Most of the rest think it’ll stay about the same. A year ago — when, in retrospect, conditions weren’t half bad — 19 percent of Ipsos respondents said their local economy would strengthen in the next six months, vs. 27 percent saying it would weaken.
In another telltale sign of how glum consumers are, the numbers were only slightly better when people were asked to predict how their own financial situation will be six months from now. Twelve percent said “much stronger” and 23 percent “somewhat stronger”; 5 percent said “much weaker” and 10 percent “somewhat weaker.” This lukewarm degree of optimism is partly explained by people’s fears about the employment market. Nine percent think it’s very likely and 18 percent think it’s somewhat likely that someone in their household or who they otherwise know personally will lose their job in the next six months “as a result of economic conditions.” Just 12 percent think this occurrence is not at all likely. Putting the matter another way, 63 percent said they’re less confident than they were six months ago about job security for themselves and their circle of family and acquaintances.