Households are formidable. Indeed, whether American, German or French, they refuse to give in to pessimism and show a slight improvement in morale in the surveys carried out among them. Admittedly, the United States, a fact Obama has certainly played thereby allowing the Americans to regain some color.
In contrast, both Germany and France, no such effect is observed, even if it is true that the French could find satisfaction to see their President highlighted on the international scene at the financial crisis.
Nevertheless, in a context of rising unemployment, exacerbated by sluggish business environment, increase morale household is somewhat surprising.
Thus, having increased by two percentage points in October, the index of household confidence French won 3 in November. With a very low level of -43, the index found a "high" since May 2008.
This improvement is all the more remarkable that almost majority of indices of the survey is improving. Starting with indicators of personal financial situation and standard of living in France. Only the persistent shadow table, households increasingly fear a rise in unemployment in the coming months.
But overall, the return of hope contrasted with the collapse of morale of entrepreneurs.
A question arises then: French households are on Prozac or is it the entrepreneurs, investors and politicians who have sunk into a depression and suicidal behavior?
In fact, the reality is certainly between the two. Indeed, businesses and markets have obviously cause for concern. In this context, households are right to worry more risk of unemployment.
However, all is not as black as some would have us believe. Indeed, oil prices and raw materials are in sharp decline. Even if these favorable trends are not fully passed on to consumer prices, they play mechanically to increase the purchasing power of households.
Meanwhile, if the banks are still very timid on credit, the sharp drop in currency rates past and future necessarily support economic activity in the coming months.
In addition, having sinned by excess Coué method, our leaders are now fallen in excess Conversely, wanting at any cost blacken the table to justify the sharp increase in public spending.
Let us be clear: this increase is dangerous. Let us not forget that public expenditure already 53.5% of French GDP (how far will we go?). However, it is equally obvious that in the short term, economic activity and employment will benefit from this fever spending of public authorities.
In this context, households are ultimately the same calculation that markets the last few months: they think only short term. In other words, "take the situation as we can, about the future, the uncertainties are so strong that it made no sense to sink into pessimism."
That is essentially what we say today the French households and their U.S. and German: Carpe Diem.
They give us is a tremendous lesson in cold blood. Hopefully companies and financial investors will remember.
Meanwhile, even if they reduce the wing, households consume significantly during the holiday season and balances in January. Which in the context of current depression, is a ray of sunshine especially valuable.
- Nicolas Bouzou (ASTER):
Difficult to draw strong conclusions about the morale of the index household published by INSEE in November. The idea is to remember that it remains very low, a level that, overall, confirms that the French perceive the recession (or near-recession) in their daily lives.
The index is summarized below -40 since May. It is a quasi-historical.
If you give a little more in detail, we notice in November, a rise of judging the past financial situation. But, again, the change is too low (2 points) and relates to levels too low to be considered a rebound. Ditto on the outlook for the situation.
The only sub-index to show a real improvement is the outlook for the standard of living in France. We may see an ad economic policies pursued in recent weeks. The French government seems determined to implement support measures targeted to support production in some sectors, even taking liberties with the objective of reducing public deficits. Better European governments manage to coordinate their actions rather well. It is relatively new and is expected to raise the level of confidence of economic agents.
That said, even if moving at the margin, the morale of households remain weak in coming months, particularly because of the rise in unemployment-related decline in activity. Indeed, in November, the balance on the opportunity to make major purchases remains very low. Even if households already feel a little less inflation, they are increasingly worried about the changing labor market. In short, all this remains gloomy.
- Frédérique CHERRY (BNP Paribas):
The index of household confidence calculated by INSEE rose 3 points in November. To -43, the index summary confidence remains at extremely low, even if it is a little higher than the trough last July (-47, a historic low since the 1987 survey).
All balances of opinions reflected in the summary indicator showed a slight improvement over their level of October, but the movement is especially sensitive regarding the assessment of households on their living standards, future and past.
As for other balances, households were sensitive to the downturn in prices so far, and confident in continuing this process. At the same time, their concerns regarding unemployment trends continue s'accroîtrent quickly, and reached a record level.
Overall the survey results accurately reflect the developments which is and will be subject to future changes in the purchasing power of French households: marked decline in inflation on the one hand, destruction of jobs and rising unemployment on the other.
For now, they believe that these developments combined have rather a positive effect on their standard of living, and in trend, their confidence index is recovering.
For all the caution: the survey shows that the opportunity to make major purchases is virtually unchanged since last June, at a very low level. After a rebound in Q3, household spending on manufactured goods are also distributed to decline in October.
We believe the overall outlook for consumption remains weak, with growth in private consumption of around 0.8% in 2009 (after 1.0% this year), the lowest since 1997.
- Alexander LAW (Xerfi):
This is a new one that almost dared hope. The summary indicator of opinion household bounced three small points in November, driven by a less pessimistic view of the financial situation and living standards in France. Unfortunately, we can not hide the fact that the index remains near its historic low.
Above all, one can fear further declines in coming months as the French see the damage caused by the crisis on the real economy. As such, the pre-announcement yesterday of Christine Lagarde on the sharp rise in unemployment (the embargo on these data will be officially lifted Thursday morning) sought to defuse a particularly information anxiety.
In these conditions, after a few weeks or less suitable on the consumption front, we must expect a late November and December months of arduous in terms of household expenditure. This is not agree-in, very good omen for the expected growth in the fourth quarter.
To explain this optimism access (relative) of households in November, do not look much further than the decline in inflation. Any surge in prices, including those products that you buy most often (gas, food) is a real relief (paid by households that have seen a moderation in prices and expect that this is sustainable) after the outbreak of the beginning of the year had been purchasing power at very high tension.
The good news is that this phenomenon should continue: inflation could even go below 2% by the end of the year, to an average annual 1.5% in 2009.
The risk, of course, is that the machine packs and that disinflation is transformed into deflation. And then the impact on the morale of households would be disastrous. Certainly, goods and services would be less expensive, which, incidentally, affect consumption. But the negative pressure on wages would be terrible ...
We believe that if this risk is important in some of our neighbors (including the UK, despite the appalling weakness of the pound sterling), it should save France. The still abundant liquidity globally and the ECB also has considerable leeway to lower its rates in order to combat this real risk of falling sustained and sustainable price.
It is comforting to the survey published today should not forget the fundamentals of the French economy: the international environment is deleterious, the industry is in recession, real estate is now bursting, the unemployment goes back and consumption remains hesitant. In other words, this slight improvement on the front morale of households do not seem sustainable.
Above all, the French are not fooled. Certainly, their perspectives on the evolution of living standards in France are a little better, but they argue in the same survey that unemployment will burn in the months ahead.
We can not say that consumption is off the hook on simple faith of a rebound off low morale households. As economic uncertainty remains as strong (in passing, rarely note that the exercise of economic forecasts has been so complicated), we can not say a recovery is taking shape. We believe that growth will remain low or even negative, until next summer before rising gently slope to the second half of 2009.
