Consumer Spending: A Beacon of Hope for Economic Revival

Covid-19 was the biggest economic shock since the Great Depression of 1929.

  • In 2020, the economies of 86% of the countries tracked by the International Monetary Fund (IMF) saw a contraction
  • Global per capita income in 2020 regressed almost to 2017 levels
  • Overall, the global economy contracted by 3.3% in 2020 - compared to a contraction of 0.1% during 2009, the year following the global financial crisis.

These figures could have been much worse were it not for the unprecedented fiscal and monetary policy support provided governments and central banks around the world during 2020.

One of the leading indicators that offer hope for this optimistic growth outlook is the increase in consumer confidence levels.

The whitepaper analyses the factors underpinning the increase in consumer confidence levels, as well as the potential factors that can generate stark divergences in the economic growth pattern of countries.

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Key Takeaways:

Consumer confidence has already raced to pre-pandemic levels across most economies.

This increase is underpinned by five major factors: (1) improved public health led by vaccination; (2) improving economic activity supported by easing of restrictions; (3) improving labour market conditions; (4) a pile-up of excess savings during the pandemic; and (5) the wealth effect led by robust asset appreciation.

The latest real GDP readings displayed a positive trajectory.

This includes Argentina, Australia, Brazil, China, France, India, South Korea and the US.

The employment rate has already crossed pre-pandemic levels in some countries.

An improvement in public health will be critical.

This and the perceived stability of future income can unlock sizeable pent-up demand as households draw down on excess savings.

About the Author:

Dr. Arun Singh
Global Chief Economist
Dun & Bradstreet

Dr. Arun Singh has worked across global quantitative and qualitative economic research, econometric modelling and commodity and industry research for the past two decades. He has provided strategic advice and expertise to aid decision making within various government and private organizations. Arun's ability to connect economic insight and data and explain business implications has led to him becoming a trusted advisor and expert for media, government and clients alike.