Its a confidence thing

A quick chart tour through some of the confidence and expectations surveys that seem to expand with increasing frequency. They all point to near-recession conditions but the official data on output, incomes and jobs will take longer to show through - hat tip to Edmund Conway for a good article on the newly released GDP data which shows that the economy is growing at its slowest rate for fifteen years and that was before the collapse in sentiment.

There has been an undeniable turning point in people’s expectations not just about their own financial situation but for the economy as a whole. People are far less likely to make major purchases - a case of making do - run that car for another year and put off the new dishwasher for another twelve months.

Manufacturing and retailer confidence is on the wane but the pressure to increase prices remains strong. Data from purchasing managers suggests that a broadly based economic contraction is on the cards and there is little that can change this in the near term. Monetary policy wont come to the rescue.

Crucially expectations of rising inflation AND rising unemployment have both started to head higher. The squeeze on real disposable incomes is for millions of households both real and severe and too many families have sufficient savings to weather the storm.