What if the consumer had confidence in the economy?

Dünya Executive - - COMMENTARY - Alaatt n AKTAS Economist

The consumer confidence index, which the Turkish Statistica­l Institute (TurkStat) generates in cooperatio­n with the Central Bank determined by a survey held in the first two weeks of every month, was renewed last week. “After the seasonal effect was included in the analysis, the Consumer Confidence Index has been published as seasonally-adjusted since January 2019,” TurkStat said in a statement.

When it comes to TurkStat and statistics, we tend to view it with a jaundiced eye. Some people might think, well, is this switch is designed to put the index in a better light? To answer that question, we have compared this new series to the old. According to the seasonally-adjusted series, the consumer confidence index, which was 58.7 in December last year, decreased to 58.2 in January this year.

What about the old index? According to this series, the consumer confidence index rose to 58.5 in January from 58.2 in December. So at the very least, we can’t really suggest there was an effort to paint a better picture for January.

What’s few po nts d fference?

So what do these numbers mean? Let’s look at what TurkStat and the Central Bank have to say:

“The monthly consumer trend survey measures the financial situation of the consumer, their assessment­s of the economy in general as well as future expectatio­ns, spending and saving trends. The consumer confidence index, which is calculated from the survey results, can be in the 0-200 range. The fact that the index is above 100 indicates an optimistic outlook in consumer confidence and pessimism if it less than 100.”

The ndex s only 58!

The index is almost half of 100, the optimism limit. So what difference does it make if the it is 60 or 65! Since January 2012, a full 73 months, we haven’t seen consumer confidence break 80. This month represente­d the second lowest value in that period (the lowest was recorded in October last year at 57.6).

Economy vs. pol cy

To reach 100, consumer’s confidence in the economy would have to increase by 72 percent. That’s a fantasy, even in the medium term. According to the survey results, Turkish people say they have not trusted the economy for years so they either have confidence in the economy but pretend that they do not or they do not actually trust the policies of the current government but, because they keep voting for it, don’t have any alternativ­e.

Both part es should take lessons

There are so many lessons to be taken form the results of the consumer confidence index for both the government and the opposition. The people’s message to government is: “I have been electing you for years but you should be aware that I am not happy with the economic policies you have been adopting. Improve these policies a little or you’ll lose me, be careful.”

Their message to opposition is: “I have never been happy with the economy; the data is clear. Make me happy on this but convince me before going to the ballot boxes. You have to make convincing promises. I’m worried that my situation will be worse. Understand me.”

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