Half of those surveyed feel the economy will be in a worse position this time next year
TODAY IS the final day of coverage of the 2009 Irish Times/Behaviour Attitudes Social Poll.
In it, we look forward to people’s general prognosis for the year ahead, the extent to which they have been encumbered with personal debt, and the personal lessons that have been learned from the rapid descent from affluence to bare survival.
Looking forward one year, people’s views as to whether the country will be better off, worse off, or about the same as it is now are not as profoundly negative as one might have expected.
Thus, half of all those surveyed feel the economy will be in a worse position this time next year, a figure which is remarkably consistent across all socio-demographic groupings. A further one in seven (increasing to one in five of all 18-34-year-olds) actually feel that things will have improved by next October, with the remaining one-third assuming things will remain pretty much as they are.
Taken in conjunction with our regular consumer confidence tracking data, our view is that consumer sentiment with regard to the next 12 months has probably bottomed out, having declined consistently since early 2008. As discussed in yesterday’s article, the general public will need reassurance in relation to a whole raft of social and economic indicators before confidence actually begins to improve to any extent.
Indeed, the findings of this poll would suggest that people generally are of the view that it will be quite some time before the economy actually begins to grow again, and that they are as a result preparing themselves for a protracted period of austerity over the coming years.
Hence, just one-quarter of all adults expect the economy to begin to grow again during 2010. A further 28 per cent feel that we can expect no growth until 2011, with a remarkably high one-third expecting no notable recovery until 2012 or beyond.
These predictions would appear to be significantly at odds with even the most pessimistic of forecasts from the Department of Finance and such credible think tanks as the ESRI.
If indeed growth does return by the second half of next year, as has been suggested by a number of credible economic commentators, we may witness a more sudden and significant uplift in confidence and spending behaviour than today’s poll figures might suggest, with people potentially beginning to loosen the purse strings by as early as autumn 2010.
One of the consequences of any such improvement in public sentiment may be the clearing of some of the personal debt currently hampering significant sections of the population.
On this point, we can estimate from the survey data that, apart from mortgage borrowings, the average Irish adult currently has just under €7,300 worth of personal debt. This figure becomes that bit more significant when we realise it includes almost half of the population (45 per cent) who claim to have no such personal borrowings at all.
In other words, most of this debt is being carried by that broad section of the population aged in its mid-20s to mid-50s, where the average amount owed rises to around €11,000 per individual.
We have no way of knowing from this research how well people are coping in servicing this debt, nor what type of pressure they may be under from their lending institutions. It is, however, revealing that an estimated 200,000 people have had an overdraft facility, credit card, debit card or ATM card withdrawn from them over the last 12 months.
We can only assume that, as
the effects of the December budget begin to register in pay packets in the early part of 2010, people will find it increasingly difficult to manage their personal debt, and begin at least in some instances to dip into any savings they may have set aside for a rainy day.
Finally, we draw our analysis of the 2009 poll to a close with an overview of personal lessons learned from this recession.
Interestingly, the most commonly cited lessons gleaned from the experiences of the last year or so are more practical in nature – specifically, a sobering realisation that people should have saved more and spent less during the good times!
Less than one in five of all adults were inclined to point the finger of blame at someone other than themselves at this question, with twice as many criticising Government handling of the crisis as blaming the banking system.
Only time will tell of course whether we will in fact begin to manage our personal finances as tightly as people are suggesting, or will yet again succumb to the rampant consumerism of the Celtic Tiger years when money begins to flow again.
Ian McShane is managing director of Behaviour Attitudes