The FINANCIAL — TORONTO, August 18 2011 – Last week’s turmoil in the stock markets has severely shaken Canadian consumers’ confidence in the economy, causing a significant drop in the TNS Canadian Consumer Confidence Index.
According to TNS official web-site, after a slight drop in July (in the wake of the US debt crisis and all-round bad economic news), the Index dropped almost a full two points in August, from 99.7 to 97.6, wiping out any optimism Canadians showed in the economy during the spring and in the wake of the Federal election.
“Canadians have clearly been spooked by last week’s ups and downs in the stock market.” said Norman Baillie-David, Vice President of TNS Canada and director of the marketing and social research firm’s monthly tracking study. “Even in the summer months, when you don’t think people are paying much attention to the news or stock markets, these gyrations (in the markets) are having a significant impact on Canadians’ view of the economy, as well as their own prospects.” The Present Situation Index, which measures how people feel about the economy right now, dropped a full point, from 100.3 to 99.0, showing that the fear in the markets is having less impact on how Canadians’ feel they are doing right now.
The Expectations Index, which measures people’s outlook for the economy six months from now, is the Index which shows the greatest impact of the fear caused by the uncertainty in the markets. This Index plummeted almost six points, from 105.4 to 99.6, its lowest point since July 2009. “All of a sudden, those market fluctuations we saw last week are having an important ripple effect. For the first time in a long time, the uncertainty in the markets is causing Canadians to feel their future prospects will be turning towards the worse. Unfortunately when it comes to consumer confidence, the fear is that pessimism often turns out to be a self-fulfilling prophecy” explained Mr. Baillie-David.
The Buy Index, which measures the extent to which Canadians’ feel that now is a good time to purchase a “big ticket item”, such as a car or a major household appliance, moved very slightly from 93.3 to 93.7, which can be interpreted as no change in statistical terms. “This is likely the combination of statistical margin of error, combined with a feeling among some Canadians that they may be better off making that purchase now, before they believe things actually get worse.” added Mr. Baillie-David. Consumer Confidence Index tracks Canadians’ attitudes about the economy each month and is part of a global study conducted by TNS in 18 countries. Three indices are produced each month to show how confidence in the economy is changing: Present Situation Index; an Expectations Index; and a Buy Index. The Canadian fieldwork is conducted using the firm’s national bi-weekly telephone omnibus service, TNS Express Telephone. A total of 1,015 nationally representative Canadian adults were interviewed between August 8 and August 12, 2011. For a survey sample of this size, the margin of sampling error is plus or minus 3.1 percentage points, 19 times out of 20.
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