The Global Consumer Confidence Survey, established in 2005, tracks consumer confidence, major concerns and spending intentions among more than 28,000 online consumers in 56 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism. Consumer confidence fell globally from 89 to 88, down for the seventh consecutive quarter. “We’ve been on a roller-coaster ride, with a lot of ups and downs and screaming along the way and the ride is not over yet,” said Carman Allison, director of consumer insights, Nielsen. “We’re about to hit another turn.”

Employment is Up – But So is Pessimism
A key component of national confidence is how Canadians perceive the job market. Fifty four percent rated job prospects as good or excellent, better than the global average (43%), but down from 58 percent in Q2 of 2011. Canadians also continue to grow more negative about how they view their personal finances. Globally, 51 percent of respondents felt good or excellent about the state of their finances over the next 12 months. That’s up one percent from the Q2 survey. Yet Canada trends in the opposite direction, with 54 percent of Canadian respondents rating their finances as good or excellent, down from 61 percent just three months earlier. “Canadians may be feeling more optimistic than the global average, amidst some positive economic trends in this country over the past year. Yet a combination of recent factors, such as rising prices of goods, stock market turbulence and bad economic news from the U.S. and Europe, are affecting consumer confidence,” noted Allison.

Discretionary Spending Flat
When asked what they are doing with spare cash, 37 percent of Canadians said they direct spare cash to paying off debts and another 30 percent pour it into savings. “Households are showing increasing fiscal responsibility. Spending is also hampered by this new reality; almost one-quarter of consumers (23%) report that no spending money remains after they’ve paid for the essentials,” Allison said.

• For more insights, download Consumer Confidence: A Canadian Perspective – Q3 2011

On the flip side, when budgets are reduced by 10 percent, discretionary spend—especially in the areas of ‘apparel’ (-21%) and dining out’ (-18%)—are reduced. Consumers also indicated a spending cut back on ‘electronics and appliances’ (-14%). “If the global economic climate worsens, these three sectors appear to be particularly vulnerable,” continued Dr. Bala.

In the event of having to make do with a smaller budget, respondents also indicated a reduction in savings/investment by 10 percent. “The asymmetry with expansion suggests that while respondents would like to preserve or add to their savings and investments, they also recognize that they may be bumping up against harder economic realities,” said Dr. Bala.

For more detail and insight, download Nielsen’s Q3 2011 Consumer Confidence report.

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Overall, consumers worldwide remained cautious regarding pace and sustainability of the recovery as dollar and unit volume remain near neutral levels (in the -1% to 1% range). A summary of spending trends in 15 key countries is outlined below. The full report, State of the Global Consumer is available for download.

Longer term, with 30 of 31 countries showing positive ad spending in the in the 2nd quarter of 2010, global consumer spending may receive a boost in the back end of 2010 and 2011 as consumers remain focused on promotional activity.

Country-by-Country Consumer Scorecard

United States
Low U.S. consumer confidence is reflected in continued spending restraint as consumers continue to reduce overall shopping trips and spending even with better prices and increased promotion support. Detailed North American Review.

Canada
Consumers are still focused on value, shopping more at discount retailers and buying more on promotion. National brands are a key driver of promotions, which are currently outperforming private label. Detailed North American Review.

France & Spain
Volume and value shares are growing in the 1-4% range. In France, consumers are spending more per trip, but they are not shopping more frequently. The opposite is true in Spain where consumers are shopping more frequently (despite high unemployment rates), but not spending more per trip.

Germany & Italy
Volume and value shares are declining as shoppers are not shopping more frequently and are not spending more per trip.

United Kingdom
Volume shares are neutral, but value shares are up. Shoppers are shifting to value channels to save money.

Austria & Switzerland
Volume and value share show no significant change from three months ago. Store brands and value channels are on the decline, but retail promotions are up.

Brazil
Volume growth continues as items sold grew 4.1% in volume, with an emphasis on beverages, which grew 7.3%, followed by perishables at 6.5%.

Taiwan
Taiwan’s fast-moving consumer goods market remains positive, mainly driven by personal care categories where cosmetics are a leading department with close to 20% growth. In food and beverages, nutritional supplements outperformed the total market.

Hong Kong
Value growth is ahead of volume trends with growth being driven by non-food vs. food categories such as baby products, which continue strong sales.

India
Fast-moving consumer goods growth was revived in Q2 2010, fueled by double digit growth of food categories. Innovations in terms of smaller trial packs coupled with heavy promotions and new application products dominated the market scene. Modern trade channels dominate, which is driven by the market leaders.

China
Consumer confidence in China has now reached a high point (index=109). As such, fast-moving consumer goods sales continue to grow and accelerated consumer spending is reflected across both food and non-food categories.

• Download State of the Global Consumer.

Loan Supply Up – Demand Down
Interestingly, the stalled economy is not due to a lack of available credit. A review of the ISI Bank Loan Survey, that analyzes the lending practices of large national and regional banks, shows a wide gap between the willingness of banks to loan versus actual lending activity (indicative of consumer interest or ability to take on loans or more dept). The survey includes mortgage, credit card and auto lending practices. In the chart below, the axis on the left is tied to the survey and is simply a 0=weak to 100=strong scale.

The axis on the right represents the Federal Reserve’s Senior Loan Officer Survey. The numbers represent the percentage of banks more willing to make consumer loans net of the percentage less willing to make consumer loans. This would be for credit card and all sorts of installment credit.

The takeaway from this chart is that until this gap closed, the recovery will not gain momentum. Confidence drives credit, and credit drives capitalism and spending.

Out-of-Work
Unfortunately, finding a loan may be easier than finding a job. July’s unemployment rate was 9.5%, but when you factor in “underutilized” people that are not working full-time, but would like to be, the rate stands at almost 16.5%—1 in 6. The percent of unemployed longer than 27 weeks is at an alarming 45%. Job losses are not anywhere near as bad as the days when we were losing over 500K+ jobs per month; but the economy needs be creating 200-250K jobs per month to take a solid bite out of the ranks of the unemployed.

At this rate, expectations that a return to normal will either not be achievable or will not occur until well into the current decade. Without a consistent level of job growth, spending will be restrained and confidence subdued.

Value is Here to Stay
The “Great Recession” drove fundamental shifts in consumer shopping and buying behavior. For many consumers, their own personal recession goes on as they continue to look for value. They have replaced pre-recession auto-pilot buying with decisions now based on trade-offs. In the latest year, Nielsen reports impressive double-digit dollar growth for the fastest growing 15 store brand categories versus single-digit growth for 14 of the fastest growing branded categories. In fact, from 2007 through 2009 and year-to-date 2010, store brand dollar share grew across all categories tracked by Nielsen. Store brands are now growing share from lead brands as well as smaller brands.

With increased promotion support from brands, store brand share growth has slowed in recent months, but it has reached a new share plateau from which to launch future growth. Store brand success will continue and will be a risk for mid-tier brands as retailers look to make room for expanded store brands and seek to eliminate in-store clutter and simplify the shopping experience. Manufacturers need to aggressively defend their space and consider store brand manufacturing or direct-to-consumer options. Premium and discretionary brand segments and retailers will need to innovate and work harder than ever to differentiate. Best-in-class retailers and manufacturers will combine new media and digital platforms with traditional methods to directly reach consumers just prior to or at the point of purchase.

As we come to the end of government stimulus programs, the U.S. economy has a long way to go to build jobs, consumer confidence and consumer spending.  With financial systems stabilizing, retailers and manufacturers need to be sure they are doing all they can to provide more value and confidence to consumers, as those consumers will ultimately be the ones leading the U.S. out of its economic slump.

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“The recession and the resulting uncertainty it has created among Americans has prompted most consumers to look at every dollar they spend,” said Pirovano. “At this point, it appears that cost beats the potential benefits of organic products when shoppers head to the grocery store.  It will be interesting to watch if sales of organic products rebound along with the economy, or whether that trend will be a victim of the vast changes affecting consumer behavior.”

In the past six months, the index has plummeted to a record low 77 points from 84 points. The catalyst: Latin America, Russia and other emerging nations are now feeling the full effects of a recession that began in the United States, officially, in December.

Though consumer anxieties about the economy take many forms, the most widespread fear centers on job loss. For the first time in the Nielsen survey, it was global consumers’ top concern, ranking No. 1 in 31 out of 50 countries surveyed.

Six months ago, only 9 percent of respondents cited job security as their primary worry. Now, nearly a quarter (22 percent) indicated they were more worried about going without a paycheck than over issues like work/life balance and the economy overall.

“With global redundancies affecting every industry, the economy and job security have eclipsed all other concerns in life today,” said James Russo, Vice President of Global Consumer Insights at The Nielsen Company.

Declining confidence has changed spending habits, with 70 percent saying they have taken steps to save on household expenses. Purchases of new clothes and out-of-home entertainment are the biggest casualties, with 56 percent and 53 percent of respondents cutting spending in those areas respectively. Forty-five percent have cut down on takeout meals, and 41 percent have switched to less expensive groceries.

Even when the economy improves, 40 percent will continue to try to save on gas and electricity, down from 45 percent economizing in that area now. And more than 20 percent will continue to look for less expensive groceries, cut down on takeout meals and buy fewer new clothes.

U.S. Confident, But Not as Much as China

In contrast to global worries, the confidence of U.S. consumers dropped only slightly, to a score of 80 from 82 and 83 for the second and first halves of 2008, respectively. (For the sake of reference, overall U.S. consumer confidence indexed at 100 during the second half of 2007.)

The modest U.S. decline may be a harbinger of better times. “We may be at, or at least very near, a bottom in this economic cycle,” Russo said. “Specifically in the U.S., while [consumers are] clearly adjusting their spending and savings, with 40 percent stating they are paying off debts and putting into savings. Americans are increasingly optimistic.”

Indeed, nearly 20 percent of Americans polled predicted an economic recovery within the next 12 months. Internationally, nearly one in five (23 percent) said their countries will emerge from the recession within a year. The Vietnamese and Indians made this prediction most frequently, with response rates of 60 percent and 56 percent, respectively.

Despite consumer confidence falling overall, the survey revealed interesting disparities among respondent nations. Consumers in Indonesia, Denmark and India seemed to be the most optimistic, with confidence ratings of 104, 102 and 99, respectively. Still, 77 percent of those polled across the globe indicated their homelands were in recession, up from 63 percent who said the same thing six months ago. Surprisingly, 65 percent of Chinese respondents denied there was any recession in progress at all.

“While China’s economy has undoubtedly slowed, February retail sales are still 15 percent up on last year and many Chinese consumers now believe the next 12 months could be a good time to go back to investing in stocks and property,” said Chris Morley, managing director, The Nielsen Company China.

Nonetheless, the weight of currency devaluations, weak export markets and falling commodity prices caused emerging markets like Russia (down 29 points to 74), UAE (down 21 points to 89) and Brazil’s (down 15 points to 82) to turn in consumer-confidence figures that had plummeted significantly. Consumers were the most pessimistic in South Korea, with consumer confidence score of 31, Japan (42) and Latvia (48).

Perhaps the survey’s most telling finding was that Latin America has seen its confidence shaken. “Six months ago as developed markets hurtled towards the epicenter of a global recession, Latin America was the world’s most optimistic region,” Russo said. “However, it hasn’t taken long for the tentacles of the global recession to reach them.”

The Nielsen Global Consumer Confidence Index, compiled twice a year, tracks spending habits and concerns among 25,420 Internet users across 50 countries. Respondents were surveyed between March 19 and April 2.

Download the report.

Consumer confidence has fallen to its lowest level in several years, according to the Nielsen Global Consumer Confidence Index, the definitive gauge of consumer sentiment around economic and social concerns across 51 countries.

Nielsen’s Global Report on Consumer Confidence, Concerns, Spending and Attitudes to Recession