CURTYN
CONSUMER CONFIDENCE, pumped by the election of populist Prime Minister Portia Simpson Miller, rose sharply during the second quarter of the year, in sharp contrast to the mood of business, where malaise set in over concerns about investment prospects and weak future profit growth.
In fact, while business confi-dence tumbled 20 per cent in the second quarter, representing a mood across sectors, the index measuring consumer confidence climbed nearly 10 per cent, taking it to a new high in the five years since the surveys began.
The seasonally adjusted index for the second quarter stood at 137.2, which according to the researchers "easily out-distancing the prior peak of 124.9 recorded in the first quarter of 2006".
"The largest recent gains were in how consumers judged future economic prospects, anticipating strong growth in employment and in the overall economy," said Richard Curtyn, head of the Survey Research Centre of the University of Michigan who undertakes the surveys in a joint project with the Jamaica Chamber of Commerce's Conference Board.
DECLINE IN CONFIDENCE
Consumers are having a tough time coping with their falling purchasing power and a scarcity of good jobs. But expectations have been raised with the advent of a new Prime Minister. People of Portmore area stocking up on food items and other supplies in anticipation of Tropical Storm 'Dennis', at Mega Mart and Shoppers Fair Supermarket, on Wednesday July 6, 2005. - WINSTON SILL/FREELANCE PHOTOGRAPHER
On the other hand, the index of business confidence slipped to 96 in the second quarter, down from 119.3 in the first quarter and 122.8 in the second quarter of 2005.
"The decline in business confidence was due to less favourable evaluation of current and expected profit margins as well as less favourable views on investment prospects," said the researcher.
However, the situation was not entirely negative, for the shift from the previous positive outlook to one where conditions were expected to "remain largely unchanged during the year ahead, rather than anticipating reversals".
Major concerns for businesses were Jamaica's anaemic growth, high unemployment and rising prices as well as crime and violence, which constrained demand.
Apparently, businesses did not align their prospects with the emergence of Simpson Miller as president of the People's National Party and Prime Minister of Jamaica at about the time when researchers were beginning to gather their data.
Opinion polls suggested that the Prime Minister's perfor-mance rating soared to 78 per cent in the immediate aftermath of her election and that it has recently slipped to a still robust 64 per cent, with strong backing especially among the poor.
In the first quarter the greatest surge of consumer confidence was in the tourist resort areas where the industry is expanding. Now the surge is in Kingston -- Simpson Miller's urban power base.
But the rise in consumer confidence about the future is quite distinct from the level of satisfaction with the present. Professor Curtyn said "Jamaican consumers are more pessimistic than any other."
Consumers are experiencing tough times with good jobs hard to find in an economy stuck on a low growth path. Curtyn said consumers expectation is that the new political direction can improve economic their state.
While the coincidence of Simpson Miller's personal popularity and the strong consumer confidence could influence when she calls a general election, it was not clear whether this could translate into stronger economic growth.
Said Professor Curtyn: "The sustained surge of confidence represents a welcome rebound from last year's troubled economy. Importantly, half of those that anticipated economic gains during the year ahead based those expectations on the impact of government pro-grammes. While the data could be hardly more promising, it also indicates the potential for some disappointment if the economy fails to produce at least some of the expected gains."
