The honeymoon’s over
“The honeymoon period was short as it was intense,” said the Survey of Consumer Confidence of the post-election economic mood.
In the second quarter, “consumer confidence posted its largest quarterly decline ever recorded”.
The optimistic expectations created by the new Government and its Jamaica Emergency Employment Programme (JEEP) disappeared almost overnight.
Consumer confidence posted a sharp decline, erasing the entire gain recorded at the start of the year, revealed the 2012 Survey of Consumer Confidence — Second Quarter Summary Report. The index of Consumer Confidence was at 111.0 in the period; down from 160.1 in the prior quarter. Last year’s second quarter confidence index was 116.8.
Business optimism sank too. Investment plans were depressed, job outlook plummeted and prospects for the Jamaican economy faded, the report found.
Gloom has consumed the prospects of businesses and consumers.
The attitude towards current economic conditions stands at 108.7, lower than last quarter, but slightly higher than at the same time last year.
“People are more emotionally realistic in things being better,” said Keith Collister, a director of Jamaica Chamber of Commerce and economics columnist in this paper (See page 12B).
The excitement of the Jamaica 50 celebrations and the London Olympics may have contributed to increased optimism compared to last year’s second quarter, he said.
But the Government has failed to seal a deal with the International Monetary Fund, causing businesses to adopt a wait-and-see attitude.
Economic optimism among businesses fell to the lowest level in three years. The Index of Business Confidence was 91.8 in the second quarter, down from 123.7 in the first quarter, and 117.5 in the second quarter last year.
Businesses believe that taxes, crime and violence and the “failure of government policies” directly affected them.
The number of companies saying that unemployment was the top problem in the country has fallen by half.
Company profits and revenues are expected to diminish due to the slow growth of the US economy and the sovereign debt problems in Europe.
“People are waiting for on-theground moves. They don’t want announcements on investments,” Collister said.
Last quarter’s more favourable expectations for economic growth did not prompt firms to adopt aggressive investment plans. “They remain decidedly cautious,” revealed the survey.
A dramatic 52 per cent of firms expected that the situation with the national economy would worsen. This is a leap from the 17 per cent in the first quarter. This was the highest proportion of companies to hold negative views on economic prospect since the last recession in 2008-09.
The all-time pessimism high, 71 per cent, was set in 2003.
Olympic and Independence optimism may not be sustained, he said, unless these events lead to a massive turnaround.
The study also revealed that the current job prospect situation is “dismal”.
Ninety per cent of Jamaicans surveyed said that jobs were scarce and hard to get.
When asked about prospects for employment for the upcoming year, just 26 per cent expected gains, down from 57 per cent three months earlier.