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NEW YORK -- Global consumer confidence in the first quarter 2010 rebounded to reach its highest level since the third quarter of 2007, according to the latest edition of the Nielsen Global Consumer Confidence Index.
This reversal is the most definitive sign that the world is beginning to recover from the recession, according to Nielsen. As consumers started to spend again, they drove the global index up to 92 points -- 100 points is average -- in the first quarter 2010. The first quarter index is a six point increase from six months ago, and two points short of the 94 point index mark in Q3 2007, which was just before the decline into world recession, Nielsen stated.
Consumer confidence rose in 41 of the 55 countries surveyed during the quarter. Consumer confidence in the U.S. improved by one index point (from 84 to 85), but was two points higher than its pre-recession consumer confidence index of 83 points in Q1 2008. The highest index on record for the U.S. was 108 points in Q3 2006.
"Conventional wisdom was that there would be a slow recovery and there have been several signs of stabilization and green shoots in the past 12 months, but Q1 of this year presented the first global show of force towards economic recovery," Dr. Venkatesh Bala, chief economist at The Cambridge Group, a part of The Nielsen Co. said in a statement. "For the first time in two years, Nielsen's global consumer data provides evidence that economic prospects are improving -- a sign manufacturers and retailers have been eagerly waiting for that consumer spending intentions are turning into actual spending reality."
Nielsen's Global Consumer Confidence Index tracks consumer confidence, major concerns and spending intentions among more than 27,000 Internet users in 55 countries. In the latest round -- conducted between March 8 and March 26, 2010 -- the number of global consumers who believe they are currently in recession dropped 19 points to 58 percent, compared to 77 percent a year ago, according to Nielsen.
All global regions posted increases in consumer confidence, but the pace and extent of recovery widened between Asia Pacific and Latin American countries compared to a sluggish recovery in the United States and western Europe.
"Asia Pacific consumers -- who were among the first to cut back drastically on discretionary spending 18 months ago -- are now confident enough to spend their way into higher growth," said Dr. Bala. "In contrast, the U.S. and Europe are likely to see a period of slow demand growth in conjunction with a largely jobless recovery in the U.S., and in the case of Europe, added uncertainty from the ongoing sovereign-debt crisis,"
Dr. Bala added: "Due to consumers' limited household spending, uncovering new areas of growth will be important for retailers. Consumer product companies will require a high degree of precision in targeting, value propositions and pricing in order to generate topline growth and profitability."
Consumer confidence also was driven by increases in job and employment confidence. In Q1 2010, 43 percent of global consumers described their job prospects as excellent/good, compared to 35 percent six months ago, the survey found.
Among the world's cautious markets -- including the U.S. -- many of the habits developed during the recession continue, including top-of-mind issues such as price sensitivity, private labels and promotions, although there are signs consumers want to resume some discretionary spending.
"Americans are still extremely cautious about spending given the uncertain nature of the recovery in the U.S. and the continued level of high unemployment. They remain committed to managing controllable costs such as gas and utility bills, and they continue to focus on repairing their balance sheets," James Russo, vice president, Global Consumer Insights at The Nielsen Co., said in a statement. "That said, they are expressing a desire to spend more on discretionary items such as out-of-home entertainment, apparel and vacations -- a noticeable shift in this survey. A huge opportunity exists for manufacturers, marketers and retailers who know how to reach the right consumers in the most effective way."
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