Tuesday, July 7, 2009

Indexing Recovery

One thing we can be certain about in relation to the current recession is that it will be the most measured, analysed and studied recession ever. A veritable cornucopia of economics Phds for generations to come!

And to add to the data stream, my own company has just developed an Economic Recovery Index that uses the opinions of 1,000 adults answering an online survey every month to try and guage where we are on the economic cycle (recession-trough-recovery etc).

We've been running it since April. The chart shows the shift in the percentages of the sample selecting each of five potential statements about the current economic situation. Like a number of other measures recently it suggests that people think things are 'getting bad more slowly' than recovering per se. Nevertheless there has been an across-the-board improvement in sentiments about the economy across all demographic groups between April and June. That said, older adults (over 50) tend to be more optimistic than the average, as do women more than men.

We are not seeing economic optimism translate into greater consumer activity yet - only 16% of adults in June agree 'I am more relaxed about spending money than I was a few months ago', unchanged since April. But a slight majority (53%) agree that 'now is a good time for young people to buy their first home' (also unchanged since April as it happens).

It's early days - I'll keep you posted if anything interesting happens in future waves.


  1. What else can I say other than I really really really like this?! Well done!

  2. Interesting stuff gerard- it would be really interest to include the standard consumer sentiment questions and examine the correlation. Also, it would be very interesting to examine the extent to which these sentiments predict durable and nondurable expenditure. I think expectations of "getting a bargain" from durable expenditure is covered in your measure but could warrant some more questions and would clearly be of interest from a number of fronts.

  3. Let me propose a variant on cognitive dissonance, let's call it statistical dissonance. We'd like to believe things are getting better. We are, after all, human. There are lots of different indicators: if we don't like the first derivative we can always look at the second derivative etc. So we will find the index consistent with what we want to find. Actually I can think of a better name: "wishful thinking".

  4. It does help in a very definitive way to have such survey results circulated. They provide a fine insight into the workings that take place. Useful tips here. It is very helpful for me because I can to know about these things. This is very nice post! I will bookmark this blog.


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