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Surge of optimism in household economies

Nia Williams

December 23, 2010

The Bloomberg-YouGov HEAT index shows that concerns over job security declined month-over-month with 22% of respondents saying their job was less secure than a month ago compared to 28% of respondents who felt the same in November.

Declining home values remain a worry with 28% of respondents feeling the value of the home they live in has declined in the past month.

Confidence in the coalition government’s handling of the economy reaches its lowest level since they took office (net -31%).

In the US, the forward looking HEAT index did not match the UK’s optimistic change by declining from a net +5% in November to +1% in December.

The forward looking HEAT index recorded its largest ever one month change from November to December. Though the index remains well into negative figures, it is at its highest score since June.

The declining concern over job security was a primary contributor but the growing optimism is likely fragile as net agreement with the statement, ‘today is a better/worse time to make a major purchase’ remains low (net -31% for third straight month).

Additionally, respondents’ fears over a future decline in the value of the homes they live in has reduced since November. However, one indicator has not seen an optimistic increase in scores as confidence in the government’s handling of the economy reached a post-election low for the coalition government at a net -31% (net -22% from October to November). However, this is still a long way from the net -56% which was reached under the Labour government in January 2009.

Todd Davis, financial services consulting director at YouGov commented:“It is difficult to pinpoint a primary reason for declining pessimism in what respondent’s household situation will be 12 months from now.

“Perhaps on the heels of the Comprehensive Spending Review many of our respondents, particularly those in the public sector, expected a more immediate impact of the spending cuts that didn’t transpire.

“The change is most likely very fragile, if not temporary, as the level of price watching, saving intentions and level of business activity in the workplace are almost unchanged.

“Either way, the change doesn’t seem to be driven by confidence in the way the coalition government is handling the economy who recorded their lowest score since taking office.”


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