Consumer confidence still falling
According to the Nationwide Consumer Confidence Index, consumer confidence fell for the third month in a row in July, it now stands at 56, having reached 84 in February (the average during the recession is 63). The Expectations Index, which measures consumers’ beliefs about how things will stand in 6 months’ time has also been falling for five months, and now stands at 76 (the average during the recession has been 85). By contrast, the spending index (which measures whether consumers think this is a good time to buy goods) is at around its long-run average, but this probably reflects a belief that things are going to get a lot tougher later in the year.
The overall picture suggests that private consumption is unlikely to fill the gap left by public sector spending. With total business investment in the first quarter of 2010 7.8% down from the first quarter of 2009 (and down more than 17% from the first quarter of 2008) the government must have its fingers tightly crossed.