Consumer confidence plunged 11 per cent in the first quarter of 2010 “due to rising concerns about future job and income prospect”, according to the latest survey, while unfavourable growth prospects pushed business confidence down seven per cent, when compared to the previous quarter.

Yesterday, the Jamaica Chamber of Commerce (JCC) Conference Board released is surveys of business confidence and consumer confidence.

According to the surveys, consumers have never been more pessimistic about job prospects or overall improvemneto their personal finances during the review period, while few businesses held a favourable view of future economic growth.

The Index of Business Confidence was 99.4 in the period under review, down from 106.6 in the prior quarter but still well above the all-time low of 75.8 recorded a year ago. The Index of Consumer Confidence was 90.8 in the review quarter, down from 102.1 in the 4th quarter, and 96.0 in the 1st quarter of 2009.

“To be sure, few businesses rate current economic conditions favourably, as the recent gain still left these evaluations well below average levels,” said the report. “Moreover, despite the recent fall in expectations, few businesses view future economic prospects as grim as a year ago.

Business operators believed that Government policies shaped under the International Monetary Fund (IMF) would positively impact the economy in the long run, while consuemrs more frequently held a negative view of IMF-generated policies, even though there were some who thought the intervention would help improve economic conditions over the longer term.

“Lower interest rates will provide some immediate relief, and while firms believe that the long term impact on the economy will be favourable, the near term hardships will nonetheless reduce the pace of economic growth in the year ahead,” said the survey report.

But for consumers: “most Jamaicans anticipate that rising taxes and higher prices for necessities in the midst of diminished job and income prospects can be expected to lower their living standards.”

There was only one other time in the past decade when a lower overall level of consumer confidence was recorded — in the second quarter of 2003 in the midst of a recession and at the peak of the Iraqi invasion.

Two-thirds of consumers in the review quarter thought the economy remained in recession — the least favourable assessment of the recent performance of the economy since widespread fears about the Iraqi invasion had its peak impact on tourism in 2003. Consumers also held the view that the recession would persist in the year ahead.

The availability of jobs remained the bleakest ever recorded for the second consecutive quarter — among all consumers, 93 per cent reported that jobs were scarce — while consumers reported the bleakest prospects for their personal finances ever recorded in the history of the surveys. Overall, just 24 per cent in the review period expected improved finances, down from 37 per cent in the previous quarter and 52 per cent a year earlier.

Few firms anticipated the length and extent of the downturn in domestic demand that was sparked by the global financial crisis. Most firms found that fundamental changes in the economic situation occurred faster than they could reasonably cut their costs.

A factor which played a role in the large number of firms — 37 per cent — that reported that profits were less than expected.

But looking forward, firms shifted away from the view that the national economy would deteriorate — 34 per cent expected improvement versus 35 per cent expecting deterioration in the first quarter of 2010, rising from the year-earlier expectations of a worsening economy by a two-to-one-margin of 28 per cent to 55 per cent.

Firms’ optimism were reflected by positive investment plans — cited by 39 per cent of firms in the first quarter, up from 3 per cent in the prior quarter and 29per cent a year ago.

Added the survey report: “While the overall level of economic prospects was well above the average economic outlook during the past decade, firms offered two caveats: gains were likely to be more common considering the deep declines in the past year, and while firms were enthusiastic about recent changes in government policies, they couched their expectations based on no backsliding.”