Euro-zone Consumer Confidence Weakens

After improving slightly earlier in 2002, Euro-zone consumer confidence has weakened since mid year. Eurostat reported that the percent balance of respondents to their survey questions, reporting an increase less the percent reporting a decrease, fell from -14% in November to -16% in December, the lowest level since early 1997.

The overall balance of consumer confidence is based on consumers’ expectations, over the next twelve months, for the financial situation, general economic climate, unemployment and savings rate. From November to December, consumers reported no change in the outlook for their financial situation, a worsening in the economic climate, a rise in unemployment and a drop in savings rate. As can be seen in the attached chart, the overall index is heavily influenced by consumers’ expectations of unemployment.