The Consumer Tracker Q4 2017
Consumers continue to show resilience in the second half of 2017
After a +3% point rise in consumer confidence in the third quarter of 2017, the latest Deloitte Consumer Tracker remains flat at -7%. This quarter’s results represent the first time since our survey began in 2011 that confidence has not fallen in the final quarter of the year.
The drivers of confidence tell a mixed story
In a repeat of previous years, consumers feel less confident about their general health and wellbeing directly after the Christmas Holidays. Entering 2018, Unemployment remains at its lowest levels since 1975 and while we have seen record levels of confidence around job security, consumers are less optimistic about their job opportunities and career progression.
Debt worries subside for consumers
Following a year worrying about debt and real-wage growth, consumers are more confident about both their disposable income and managing their levels of debt compared to the third quarter of 2017.
Consumer spending levels remain a concern
Despite consumers improving their outlook in the second half of 2017, their spending remains under pressure. Spending on essentials this quarter has been driven by price inflation and while consumer spending on discretionary goods has grown quarter on quarter (as consumers splurged on sale items and gifts during the Black Friday and Christmas shopping periods), discretionary spend is marginally down year on year.
Consumer optimism for 2018
There are reasons to think that 2018 won’t be as tough on consumers as 2017. The ONS has reported that after reaching a six-year high in November, inflation fell back to 3% in December. Inflationary pressures are expected to continue to ease in 2018 and with the Bank of England having raised interest rates for the first time in over a decade in November 2017, the markets are pricing in another 25 basis point rise in 2018.
Whilst stuttering wage growth remains a concern, falling levels of inflation should ensure that real-wage growth in 2018 is under less pressure than in 2017. A faster than expected fall in inflation could provide some well needed support to real-wage growth and spending.
Deloitte consumer confidence index
A note on the methodology
Some of the figures in this research show the results in the form of a net balance. This means that in a survey of 100 respondents, assume that 30 reported they are spending more, 50 reported no change and 20 reported they are spending less. The net balance is calculated by subtracting the number that reported they spent less from the number that reported they spent more, i.e. 30 – 20 = 10. This means 10% of consumers reported that they spent more rather than less.