The Consumer Confidence Index crashed in May 2013. There is no delicate way of describing the public's reaction to the government's measures - this was a loss of confidence. The index, compiled by Globes Research and pwc Israel, fell to a level characteristic of the most difficult times during the global economic and financial crisis.
The Consumer Confidence Index fell 22.2 points in May to 62.9 point (baseline 1996 = 100), after rising 4.3 points in April and 6.6 points in March. The May figure may reflect an over-reaction to the austerity budget, and the index may recover in June, and the key question is how will the public respond when the austerity measures are implemented. The survey for the May index was conducted before the VAT hike came into effect on June 2.
It is very important to emphasize that most Israelis had optimistic expectations about their personal economic situation, even as they were pessimistic about the economy. Not for the first time, in May personal expectations sailed into pessimistic territory.
The Consumer Confidence Index comprises three questions: "What in your opinion is the current state of the economy?"; "What will be the state of the economy in six months' time?"; and "What will be your personal economic situation in six months' time?" For each question, "Globes" takes the proportion of optimists, deducts the proportion of pessimists, and thus obtain what is called "the net balance of optimism".
The net balance of optimists to the question, "What in your opinion is the current state of the economy?" fell by 21.8 points in May to 47.5 points, after falling 1.8 points in April and rising 4.9 points in March. This was the largest monthly fall since July 2011, and the lowest level since the first half of 2009, at the height of the "Great Recession".
Published by Globes [online], Israel business news - www.globes-online.com - on June 6, 2013
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