13% fall in household wealth will shape any 2010 rebound
One key reason to expect a more subdued recovery from the downturn is that the household sector in the UK has suffered a huge negative wealth effect over the last couple of years. Asset values have fallen but outstanding debts have not and it is this imbalance that will shape the nature of any rebound in consumer demand for goods and services even though the cost of borrowing is at unusually low levels. The National Institute has done some research on the negative shift in personal sector wealth and it is reported in this article in the Telegraph.
Consumer Spending and Saving in the UK Economy
The decisions of millions of households about how much to spend and save and (perhaps) borrow will largely dictate where the domestic economy goes in the next twelve months. Here is our latest macroeconomic snapshot, a streamed presentation on aspects of consumer spending and saving behaviour in the British economy over recent years.
The presentation covers the latest available data on:
Consumption and GDP growth
Consumption, GDP and Interest Rates
Durable Goods Spending
Consumer Confidence
Confidence and Policy Interest Rates
Consumer Borrowing
Borrowing and the Savings Ratio
Indicators of Consumer Sentiment
Spending and Real Disposable Income
FTSE 100 and UK House Prices
Personal Insolvency and Debt
Household Savings Ratio
Savings Ratio, Interest Rates and Unemployment
Savings Ratio for Selected Countries
Taking the pulse of the global economy
The BBC news website is running a series of articles taking the pulse of the global economy - these will appear during the summer months - a resource that will no doubt be well worth following. Here is the link.
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