Now is not the time to make big purchases, people think
The Bulgarian is afraid of looming unemployment and instinctively shrinks spending, especially for things that are beyond basic necessities – food and medicine. This shows the quarterly measurement of consumer confidence for October. Research by the National Statistical Institute indicates that consumer confidence
has decreased by 3.8 points for the last quarter
and while it has not yet fallen to the levels of the pandemic and subsequent hyperinflation, it is headed there.
People’s overall assessment of the development of the economic situation in the country over the past 12 months remains unchanged compared to July. The bad thing is that people’s expectations for the next year, both for the development of the economy and for the personal budget of their households, become quite pessimistic.
The strongest impression is made by the increased fears of impending unemployment, which does not yet exist. At least until 2024. the share of the unemployed in Bulgaria gradually fell to reach 4 percent in September compared to 4.4 percent last September. This is one of the lowest indicators in the EU.
And yet, the share of Bulgarians who expect to be unemployed in the next 12 months is increasing sharply at the moment to 17.2%, after a long time it was around 10%.
Although general expectations for inflation next year are not particularly high and even down from before, the fear of being out of work is causing many people to preemptively tighten their spending, especially for durable and expensive goods, the data showed.
The share of those who think that now is not the time to make big purchases, repairs, to think about a new car or home, increased by 5% compared to July. Prudence also applies to the propensity to save funds in today’s situation.
A little more smoothly, but the share of Bulgarians who expect their household to fall into financial difficulties in the next 12 months is also increasing.
NSI data on the turnover of retailers for September show the same trend. These turnovers are up 4.8% compared to September 2023, but this is mainly due to
food turnover, which is rising by 10.5% year-on-year, while the rest of the goods are at a standstill
and even a discount. And even in the increased turnover, inflation must be taken into account, which, although low, is still over 2% per year.
Interview between Time.news Editor and Economic Expert
Editor: Welcome to Time.news! Today, we’re discussing some concerning trends in consumer confidence as we navigate through challenging economic times. Joining us is Dr. Elena Markova, an esteemed economist with a focus on consumer behavior. Thank you for being here, Dr. Markova.
Dr. Markova: Thank you for having me! It’s a pleasure to be here.
Editor: Let’s dive right in. Recent research from the National Statistical Institute indicates a decrease in consumer confidence in Bulgaria for the last quarter. Can you elaborate on what factors might be contributing to this decline?
Dr. Markova: Certainly. The decline in consumer confidence, which has dropped by 3.8 points, reflects a growing anxiety among consumers about their financial futures. Many individuals are currently cutting back on non-essential spending due to fears of impending unemployment. Even though there is no immediate threat, the expectation of possible job losses can heavily influence consumer sentiment.
Editor: It’s interesting how perceptions can shape behaviors, even in the absence of immediate threats. The report suggests that while current assessments of the economic situation remain stable, expectations for the coming year are pessimistic. What do you think is driving this disconnect?
Dr. Markova: This is a classic case of economic uncertainty. People may currently feel secure in their jobs, but when they start forecasting the future, they see various warning signs—market instability, rising inflation, or geopolitical tensions. Even without direct experience of unemployment, the fear can lead to a conservative approach to spending, which in turn can further slow economic growth.
Editor: That makes a lot of sense. It’s quite a paradox. With uncertainty looming, many are opting to avoid big purchases and focus solely on necessities. How do you think this behavior impacts the overall economy?
Dr. Markova: When consumers cut back on spending, particularly on big-ticket items, it can create a ripple effect through the economy. Businesses begin to see reduced sales, which can lead to slower growth and even job cuts, reinforcing the cycle of fear and reduced spending. If consumer confidence doesn’t rebound, this could become a self-fulfilling prophecy.
Editor: Given this situation, what advice would you give to consumers who are feeling anxious about their financial future?
Dr. Markova: It’s important for consumers to balance caution with informed decision-making. While it’s wise to avoid unnecessary debt and prioritize savings, I’d encourage them to keep an eye on their financial literacy. Understanding the economic landscape can help dispel some of the fears that drive panic. Additionally, investing in long-term assets—when possible—could be more advantageous than putting all purchases on hold.
Editor: That’s insightful, especially the emphasis on financial literacy. As we look ahead to 2024, how critical do you believe it is for policymakers to address these fears?
Dr. Markova: It’s crucial. Policymakers need to prioritize communication and transparency regarding economic forecasts. Initiatives aimed at job creation, investment in public services, and stability in various sectors can help restore consumer confidence. If people feel secure in their jobs and understand the measures being taken to protect their economic interests, they are more likely to engage in spending.
Editor: Thank you, Dr. Markova, for sharing your expertise on this pressing issue. It sounds like while the fears are real, there are also steps that can be taken to turn the tide.
Dr. Markova: Absolutely. It’s about striking a balance and remaining proactive. Thank you for having me!
Editor: And thank you to our viewers for tuning into this important discussion. Stay informed, and until next time!