Consumer confidence falls through the floor
One fundamental indicator of the consumer’s view of the economy is the consumer confidence index prepared jointly by TurkStat and the Central Bank. This index reveals the financial expectations of the average citizen, the forecast for the general economy, and how expectations about unemployment and the possibility of saving are evolving.
There are many questions in these four groups and the responses to surveys give us the consumer confidence index.
The consumer confidence in- dex for February was released last week and showed that overall confidence decreased by 0.7 percent to 57.8 compared to January, 20 percent lower than a year ago.
Like all confidence indices, the consumer confidence index also ranges from zero to 200. The fact that the index is below 100 indicates insecurity; over 100 indicates an optimistic view.
Therefore, the 57.8 level is important when considering the lower and upper limits that the index can take. Look, we’re talking about an index that has fallen to almost half of 100, which is the limit of optimism.
We deserve a medal!
This year, it was announced that the consumer confidence index will be adjusted for seasonal effects. The adjusted index was previously pegged back to 2012. This month, the period was extended a little. We now have monthly data for the seasonally-adjusted index until 2004.
The first fact that should be underlined is that the consumer has had no confidence in the economy over the last 15 years, from January 2004 to February this year. The index has not reached 100 in any of these 182 months. We tracked the months where the index dropped below 60 and where it broke the 90 mark. Below 60 indicates a threat and above 90 is encouraging, though still not in the realm of optimism.
The index was above 90 in 2004 and in the first two months of 2005, but never after that. We first saw the below 60 danger signs during the 2008-2009 global crisis and intensify in September last year, continuing a downward spiral that continues today. February’s 57.9 index is the fourth lowest in this 182 months. That’s why we keep saying that if this trend persists, the indices we will see in the coming months will reach record lows and may “deserve” a medal!