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Economy in Brief

Finland's Consumer Confidence to All-Time Low...Among Other Things
by Robert Brusca  April 27, 2020

Finland's consumer confidence index has short history, but in the graphic we overlay the longer-lived EU measure of confidence against the Finnish domestic measure and the sharp recent collapse in the recent index is starkly revealed. Both measures have been declining from local peaks around early-2018.

While there is a mantra afoot about how the global economy was doing fine until the coronavirus struck, the reality is that an extended recovery from the Great Recession and the stresses of a U.S.-China trade war as well as an EU-U.K. Brexit conflict had been also percolating and taking their toll.

The table below is the Finnish domestic confidence index. It shows sharp drops to weakness across the board; in most cases to an all-time low. The exception is a still-above median (above a rank of 50) assessment of the household financial situation and a low but not (yet) bottom scraping assessment of consumer prices.

This is now the world we live in.

We are going to be getting a strict diet of extremely weak economic reports. And while stocks have risen in many places to significantly recovered readings, they have yet to face the worst of the conventional data that is yet to come such as negative GDP readings and historically unprecedented numbers for job losses as well as skyrocketing unemployment rates. That is to say that stocks are going up while the economy is still going down. So far, markets are being kept aloft by their ‘tech' sectors even though the breadth of the stock indexes largely is poor.

Sharp declines or weakness in things like consumer confidence or leading indicators or factory orders may chill economists to the bone, but these are the technical numbers the man-in-the-street does not relate to. Soon countries will be reporting numbers that will resonate with the man-in-the-street and they will chill him to the bone as well. Is all that baked into market prices or not?

Today the main numbers released globally were (1) a record increase for joblessness in France, (2) this report, that is a record low for Finland's (short history) of consumer confidence, (3) as well as a weak reading for Finland's manufacturing confidence, (4) Danish retail sales that fell impaired by the corona lockdown, (5) Hong Kong's sharp drop in its trade deficit, and (6) Brazilian confidence that hit a record low.

Countries from different continents issuing all sort of differing economic measures are reporting dramatically weakened results. There can be little doubt about what is in the pipeline. The question is whether people who have been sheltering and have a clear notion that things are really quite different have a clear appreciation of what this means for the economy. That is something we will be finding out in the coming weeks as a variety of economy indicators are released, including those that will resonate with the man-in-the-street who for the most part has not been in the street but has been sheltering in place- someplace.

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