Irish consumer sentiment and its impact on consumer spending

1. The Economic Recovery Index
An Amárach Research Briefing
August Index Results
© Amárach Research 2009

2. 2
Timing Recovery
Business Cycle Peaks & Troughs All recessions end in recovery – so will
this one
The biggest forecasting challenge is
timing: when do we know the recession
is over and recovery has started?
Amárach Research has developed the
Economic Recovery Index to help us
track the economic cycle more closely
This report summarises the ERI results
for April to August 2009
The July fieldwork was conducted on
18th-24th August inclusive
Amárach Research Economic Recovery Index

3. 3
A Matter of Measurement
Every month we survey a representative sample of 1,000 adults online and ask them
to tell us which statement ‘best describes the economic situation in Ireland right now’
Each statement corresponds to a different stage in the economic cycle
Amárach Research Economic Recovery Index

4. 4
A Matter of Measurement
After July’s weakening in our index, there has been some recovery, though not
quite all the way back to the most recent high in June
However the percentage saying the economy is ‘bad but improving’ is the highest
since we started compiling the Index in April
July 0% August 0%
July 1% August 1%
July 58%
58% August 53%
53%
July 16%
16% August 20%
20%
Amárach Research
July 25%
25% August 26%
26% Economic Recovery Index

5. Economic Recovery Index
Using the answers to the survey we have created the Economic Recovery Index,
which ranges from 0 to 100 (0 = worsening recession; 100 = back to peak)
The ERI improved between July and August, recovering some of the ground lost in
June-July
0 2009 ERI Score 100
April 8
April
May May 16
June 18
June
July 15
July August
August 17
Amárach Research Economic Recovery Index

6. 6
Other Sentiment Indicators from ERI Survey
Percent of adults who agree with each statement: July and August 2009
Ireland will be through the I am optimistic in spite of The recession is
worst of the recession the current economic affecting other people
in 12 months time situation more than it is affecting
me
43% 60%
61%
42% 58% 60%
July August July August July August
I feel financially I have started saving a lot Now is a good time for
comfortable enough to more than before because young people to buy their
make it through the of the recession first home
recession 38%
48% 56%
47% 33% 55%
July August July August July August
Amárach Research Economic Recovery Index

7. 7
Mood of the Nation
Did you experience any of these feeling a lot of the day yesterday?
July and August 2009
58% 60%
54% 55%
45% 47%
40%
37%
23%
20% 19% 18% 18%
15%
Enjoyment Happiness Stress Worry Sadness Physical Anger
Pain
July August
Amárach Research Economic Recovery Index

8. 8
Insights & Implications
The longer the recession continues the more
likely it is that those not directly affected will
begin to assume that they have ‘dodged the
bullet’
This in turn will lead to some reduction in
precautionary savings behaviour (as has
happened) which should feed through into a
modest increase in consumer spending
However, this increase will not be sufficient in
the short term to offset the negative impact of
continuing increases in unemployment and
reductions in after tax income
Nevertheless, at some stage, the majority of
consumers (and workers – who will not lose
their jobs) will loosen the purse strings as they
believe the economic cycle has reached the
trough and moved beyond it.
Amárach Research Economic Recovery Index

9. 9
About Amárach
Amárach Research is a full service
market research agency
The questions for the Economic
Recovery Index are run on our monthly
online omnibus survey of 1,000 adults
Keep up with Amárach’s thinking by
subscribing to our free fortnightly ezine:
Consumer Foresight
More information at:
www.amarach.com
Check out our blog here:
www.amarachresearch.blogspot.com
Amárach Research Economic Recovery Index

10. 10
Amárach Contact Details
Gerard O’Neill - Chairman
Sylvia Langtree - Director
Amárach Research
11 Kingswood Business Centre
Citywest Business Campus
Dublin 24
T. (01) 410 5200
E. gerard.oneill@amarach.com
sylvia.langtree@amarach.com
W. www.amarach.com
B. amarachresearch.blogspot.com
Amárach Research Economic Recovery Index