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Economy in Brief


by Robert Brusca French Household Confidence Rises by Two PointsJune 29, 2007

French household confidence rises by two points.

Unexpected strength - critics say it can’t last.

Strongest reading since mid-2002.

Critics say that this spurt cannot last. A rise in confidence after the elections was expected. But this continuing rise is now on thin ice, or so many contend. A look at the survey responses may prove the critics correct, however. At best improved household confidence is speculative.

Much of the reason for the improved tone in the survey is based on the expectations of higher living standards over the next 12months. This response in the 80th percentile of its historic range is one of the stronger responses in the survey.

Consumers also expect to make more purchases. Car, home, and home renovation spending are high on consumers’ lists although NONE OF THESE improved in the current month. Oddly plans for consumer durable purchases are very weak, in the bottom 10% of their historic range. Expectations for unemployment in the next 12 months are in the bottom third of their range; the ability to save is in the 97th percentile for the next 120 months.

The current financial situation is only rated in its 38th percentile. For the past 12 months it is rated in its 65th percentile. For the next 12-months it is rated in its 81st percentile.

A lot is riding on the future, even the French admit; they ain’t seen nothin’ yet...it’s what they expect to see in the future that is driving confidence.

Sarkozy better be able to deliver the goods.

INSEE Household Monthly Survey
          Since Jan 1990 Since Jan 1990
  Jun-07 May-07 Apr-07 Mar-07 Percentile Rank Max Min Range Mean
Household Confidence -12 -14 -20 -22 61.4 38 5 -39 44 -21
Living Standards 10COLSPAN
  Past 12-Mos -45 -52 -57 -59 39.5 61 1 -75 76 -49
  Next 12-Mos -4 -2 -17 -20 80.4 19 7 -49 56 -25
Unemployment: Next 12 m -3 -3 14 27 21.6 187 84 -27 111 40
Price Developments 10COLSPAN
  Past 12-Mos -10 -6 1 4 61.4 64 29 -72 101 -32
  Next 12-Mos -27 -39 -37 -37 36.3 38 31 -60 91 -34
Savings 10COLSPAN
Favorable to save 35 31 26 27 49.2 152 66 5 61 43
Ability to save Next 12-Mos -3 -2 -10 -11 97.2 3 -2 -38 36 -20
Spending 10COLSPAN
Favorable for major purchase -6 -10 -10 -12 64.4 43 15 -44 59 -14
NSA 10COLSPAN
Car Purchase -70 -73 -74 -74 83.3 4 -67 -85 18 -76
Home Purchase Next 24-Mos -82 -85 -86 -86 90.9 2 -81 -92 11 -87
House renovation -50 -49 -51 -51 96.8 2 -49 -80 31 -70
Consumer durables -10 -10 -9 -9 14.6 186 2 -12 14 -2
Financial Situation 10COLSPAN
Current 13 17 12 11 38.1 99 26 5 21 14
Past 12-Mos -11 -14 -18 -19 65.2 50 -3 -26 23 -14
Next 12-Mos 4 6 0 -1 81.5 21 9 -18 27 -2
Number of observations in the period 208
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