Italy's Consumer Confidence on Slippery Slope

For Italian consumers the thrill is gone. That is if there ever was a thrill. Confidence did rise as the recession wound down, but then its rebound deflated very quickly as expected recovery proved to be somewhere between elusive and nonexistent. The rise in confidence in the recovery was not very robust nor was it long-lasting. Italian confidence has already deflated to the 16th percentile of its historic ranking of values. That is, consumer confidence in Italy has been lower than this only 16% of the time since 1993. That is a fairly sour assessment of where Italian consumers think they stand.

Consumers rate the past 12 months as being reasonably good, better only 43% of the time (57th percentile). But the forward looking metric assesses the overall situation as in the bottom 1.9 percentile, worse than this only about 2% of the time. That is a dreary assessment; essentially it anticipates the kind of weakness Italians only see in recessions.

The fear of unemployment is a top 6% event (94th rank percentile).

Clearly European debt worries are hanging heavy over Italy and her consumers.

The sharp contrast between current (last 12months) and future (next 12-months) assessments across categories is striking. Conditions in Italy may not have been stellar but expectations have fallen off a sharp and steep cliff.

For this week the attention has turned to the US debt and debt ceiling problem. Europe will be on the periphery for a much needed rest. But don’t expect to rest by much since what is threatening there and what is threatening in the US are so closely related. Contagion is only just around the corner.