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Economy in Brief

French Consumer Confidence in Abrupt About Face
by Robert Brusca November 29, 2007

The abrupt drop in French consumer confidence in the INSEE survey is sharp and as strong a reversal as appeared in early 2001. Confidence itself at -28 in the 11 percentile of that variable’s range – very weak showing. Living standards over the past 12 months as well as those expected in the next twelve months rank in the bottom eight percent of the range for such responses historically. Expected unemployment in the next 12 months is barely below the mid point of its historic range at a level of 13.

Price developments over the past 12 months have given the second highest reading ever (since January 1990). Expected price developments in the 12 months ahead are still elevated in the 57th percentile of their range.

Oddly the ‘favorable to save’ response ranks above its midpoint at the sixty-first percentile. But ‘the ability to save’ ranks in the bottom third of its range.

The financial situation is assessed as being in its 57th percentile at a reading of +15, a slippage from October’s 16. But the past 12 months are assessed as having been in the 40th percentile of their range; what’s worse is that the next 12 months are assessed as being in the bottom third of theirs.

The French consumer has shed all the post election visions of nirvana and Sarkozy’s honeymoon is over. The strong euro, ongoing budget fights, and racial unrest in Paris’ suburbs are taking their toll despite the spirit of optimism that swept him into office and lingered…for a while.

INSEE Household Monthly Survey
          Since Jan 1990 Since Jan 1990
  Oct
07
Sep
07
Aug
07
Jul
07
%tile Rank Max Min Range Mean
Household Confidence -22 -21 -17 -15 25.6 118 10 -33 43 -17
Living Standards
  Past 12-Mos -53 -50 -47 -46 15.5 153 18 -66 84 -37
  Next 12-Mos -24 -26 -17 -11 31.6 103 15 -42 57 -18
Unemployment: Next 12 11 11 0 -7 43.6 155 73 -37 110 30
Price Developments
  Past 12-Mos 14 10 5 1 81.6 22 30 -57 87 -20
  Next 12-Mos -18 -15 -20 -26 46.2 19 31 -60 91 -34
Savings
Favorable to save 32 36 35 32 77.8 23 40 4 36 23
Ability to save Next 12 -6 -5 -5 -4 58.6 67 6 -23 29 -8
Spending
Favorable for major purchase -10 -8 -6 -3 55.2 62 16 -42 58 -12
Financial Situation
Current 16 16 15 15 61.9 39 24 3 21 12
Past 12-Mos -16 -15 -14 -14 50.0 85 -5 -27 22 -16
Next 12-Mos -5 -4 -3 -1 40.7 172 11 -16 27 0
Number of observations in the period 208
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