The November CCI data has all but reversed the uptick of confidence observed in October. The Consumer Confidence Index, which began to decline about a year ago, now seems to be stabilizing at a new and lower level. The breakdown of the index between different gender and educational groups suggests that intensive media coverage of particular issues and the diversity of information sources with different biases can significantly influence consumer confidence (see ISET Economists blog: Confidence Matters!).

In November, the Consumer Confidence Index fell to -40 points (a 3.8 points decrease from October). Consumer expectations seem to be have been affected the most, declining 4.9 points to reach the -29.1 mark, while the present situation index remained at a low level with a 2.6 points decrease (reaching -50.9 points).

Consumers’ main concern about the present situation was related to their personal finances and the general economic situation in the country. Here are some of the insights from the November CCI data:

1. The share of respondents assessing their household’s financial situation over the past 12 months as being much worse increased by 9 percentage points, from 29% to 38% month over month (MoM);
2. The share of those assessing the change in the general economic situation in the country over the past 12 months as being much worse increased by 11 percentage points, from 37% to 48% MoM.

Consumers’ assessments of the future economic situation was one of the drivers for the decrease in the CCI:

1. The share of respondents expecting the economic situation to improve in the next 12 months decreased from 41% to 32% MoM;
2. The share of those expecting higher unemployment in the next 12 months increased from 32% to 38% MoM;
3. The share of people expecting prices to rise more rapidly increased from 15% to 23% MoM. However, the overall price expectations index did not deteriorate significantly from the previous month.

“BABUSHKAS” (GRANDMAS) AND “DEIDAS” (AUNTIES) PUSH CCI DOWN

The ISET team has recently noticed an interesting characteristic of the consumer confidence index. The index is typically much lower for females aged over 35 than for any other age and gender group. Considering that this subgroup typically makes up a third of the total sample of the survey (30-35%), older “babushkas” and middle-aged “deidas” seem to be behind the latest CCI decrease. In November, the index for females over 35 dropped by 11.7 points and reached its historic minimum of -48.7 points. This relatively sharp drop was quite unusual, given that for “grandmas” and “aunties” the index has typically shown less variability overtime than for all other groups.

The decrease of the index for other subgroups was relatively modest, while for younger males there was even an improvement of 1.8 points (reaching -29.3). Interestingly, as the above chart shows, although all subgroups generally follow the same trend of development, “babushkas” are relatively more radical in pushing the curve downward.

An analysis of the correlations between actual monthly estimates of GDP growth (given by Geostat’s Rapid Estimates of Economic Growth) and the CCI index shows that grandmas and aunties are typically very good at aligning the current situation in the country with their expectations for the future. The correlation coefficient between their expectations index and actual GDP growth in that month is 0.64, which is higher than for any other group (a coefficient of 1.0 would imply perfect correlation, and 0 would imply no correlation at all).

On the other hand, males in general, and males over 35 in particular, are much better than their female counterparts in aligning their expectations about the future with the actual monthly average GDP growth one year ahead. We can see that the correlation coefficient between the expectations index and average GDP growth one year ahead is 0.55 for males over 35 years old; versus 0.19 for females of the same age.

In November, both the present situation and expectations components of the CCI improved for males, however in responses to certain questions some worsening was still observed:

• The share of male respondents answering that the general economic situation had worsened a lot in the previous 12 months increased from 34% to 49% MoM;
• The share of male respondents saying that prices had risen a lot in the past 12 months decreased from 71% to 59% MoM;
• The share of male respondents expecting prices to increase more rapidly in the next 12 months increased from 15% to 23% MoM;

Female respondents are more pessimistic, with their biggest concerns seeming to be household finances and the expected future economic situation.

• The share of females assessing general economic situation for the last 12 months as having been a lot worse increased from 39% to 49% MoM;
• The share of females expecting the general economic situation to get better in the next 12 months decreased from 40% to 28% MoM;
• The share of females saying that the financial situation of their household had got worse increased from 44% to 53% MoM;

Looking at the age distribution of answers to specific questions, we can see that younger people (35 years and below) are more confident about the present situation, while older respondents (above 35 years) are more pessimistic across all questions:

• The share of respondents under 35 that thought it was a good time to make major purchases increased from 16% to 26% MoM;
• The share of older respondents assessing the general economic situation of the country over the last 12 months as much worse increased sharply from 35% to 52% MoM;
• The share of older respondents expecting the general economic situation to get a lot worse in the next 12 months increased from 13% to 23% MoM;
• The share of older respondents expecting unemployment to increase over the next 12 months increased from 33% to 43% MoM;
• The share of older respondents saying that the financial situation of their household got a lot worse increased from 31% to 44% MoM;

REGIONAL PECULIARITIES

CCI decreased in both Tbilisi and the rest of Georgia (RoG), but did so more in the capital. Consumer confidence significantly decreased in Tbilisi (by 7.1 points, offsetting the increase in the previous month), reaching -39 points. In the RoG, the index decreased more modestly by 2.2 points, reaching -40.6 points.

In Tbilisi, the focal point of consumers’ concerns was the financial situation of their households and the expected economic situation in the country:

• The share of respondents from Tbilisi saying that the financial situation of their household got a lot worse over the past 12 months increased from 24% to 40% MoM;
• The share of respondents from Tbilisi saying that it was a good moment to save decreased from 33% to 22% MoM;
• The share of respondents from Tbilisi saying that general economic situation got a lot worse over the last 12 months increased from 36% to 52% MoM;
• The share of respondents from Tbilisi expecting the general economic situation to get a lot worse in the next 12 months increased from 13% to 22% MoM;
• The share of respondents from Tbilisi expecting unemployment to increase in the next 12 months increased from 27% to 41% MoM;

At the same time, the CCI for respondents from the Rest of Georgia (RoG) did not change very much in November. The slight worsening observed was primarily caused by responses related to the question about the expected economic situation in the country.