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Economy in Brief

French Confidence, Still In A Deep Pit, Rises 
by Robert Brusca  June 26, 2009

Consumer confidence in France has risen in three of the last for months with one month marking a pause in the rising trend. French confidence hit its low point in July of 2008 at a level of -48. Since then although the recession has worsen in most of the world, French consumer confidence has embarked on a rising trend that has extended its trend rise during this whole period of economic malaise.

This is probably one reason that France has weathered the recession better than other European countries. Another reason being, of course, that French fiscal spending has been greater, and today we are hearing some misgivings about the size of the French fiscal deficit. French Prime Minister Francois Fillon warned on Friday that budget deficits "could compromise even the survival of our economic systems if we do not manage to control them."

Confidence is still in the lower 19% of its range since 1990. By count, confidence has been weaker than this only 6.4% of the time. So the range reading is more comforting than it should be.

Consumer concern about unemployment is the highest it has been. Still the outlook for living standards in the 12 months ahead is in its 17th range percentile compared to a standing of 9% over the past 21 months. Both figures however have been worse only 5.6% of the time. In that sense there is not improvement in the outlook.

Only about 25% say the time is right for a major purchases; the response is worse than that only 15% of the time.

On balance the good news is that the French figures show some improvement. But let’s not kid ourselves; the readings are still painfully weak. Europe’s leaders should not be counting their chickens before they are hatched. There is still a lot of risk out there. In response to a question about European recovery, European Commissioner for Economic and Monetary Affairs Joaquin Almunia said Friday. "We are not there. The U.S. Economy is starting to give signals that it is near to or at the beginning of a recovery." Even though the US is in the lead no one is ‘there’ yet. And there is no room for complacency. Maybe the US congress should be more concerned with doing things to aid recovery than to find itself a scapegoat for an economy gone bad and stimulus monies (it approved) less than well spent.

INSEE Household Monthly Survey
  Since Jan 1990 Since Jan 1990
  Jun
09
May
09
Apr
09
Mar
-09
Percentile Rank % Max Min Range Mean
Household Confidence -37 -40 -40 -42 19.0 6.4 10 -48 58 -19
Living Standards
  Past 12 Mos -73 -75 -75 -76 9.0 5.6 18 -82 100 -40
  Next 12-Mos -47 -50 -53 -58 17.1 5.6 16 -60 76 -21
Unemployment: Next 12 96 89 84 79 100.0 99.6 96 -37 133 31
Price Developments
  Past 12Mo -24 -18 -12 -7 27.3 48.3 64 -57 121 -16
  Next 12-Mos -53 -55 -53 -51 7.5 3.4 33 -60 93 -34
Savings
  Favorable to save 9 7 10 14 33.3 7.3 39 -6 45 22
  Ability to save Next 12 -18 -20 -15 -13 17.2 6.4 6 -23 29 -9
Spending
  Favorable for major purchase -27 -28 -30 -29 25.9 15.4 16 -42 58 -14
Financial Situation
  Current 12 12 12 12 42.9 57.3 24 3 21 12
  Past 12 MOs -23 -28 -26 -28 43.8 17.9 -5 -37 32 -17
  Next 12-Mos -13 -16 -17 -20 31.4 8.1 11 -24 35 -1
  Number of observations in the period 234
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