· On the basis of its January survey, GfK* is forecasting that its economic climate measure will decline for the fourth month in February to 3.2% from 3.4%, as shown in the first chart.  This marks the fourth month of decline.

· The January survey has shown that German consumers continue to be less enthusiastic about the general economy and their own prospects than they were in September/October of last year.  Even though the survey shows an increase of 4.2 percentage points from December to January in the percent balance of those who intend to increase their spending, it is, at 25.4%, still below the recent peak of 36.5% reached in September of last year.  GfK suggested that the proliferation of special sales and discounted merchandise may have had a positive effect on the propensity to consume that has over come the negative effect of poor income prospects.  The components of the survey are shown in the second chart.

· Although there has been a substantial improvement in the components of the survey since the low points reached at the end of 2008 and early 2009, only income expectations are at all close to the all time peaks reached in late 2006 and mid 2007.  The percent balance on income expectations was 12.5% in January, 21.1 percentage points below the all time peak of 33.6%. The comparable figures  for economic expectations were 1.5%, 67.5 percentage points below the all time peak of 69.0% and for the propensity to consume 25.4%, 39.0 percentage points below the all time peak of 64.4%  These data are shown in the second chart and in the table below.  

*Geschellschaft fur Konsumforshung.  (Company for Consumer Research)