63% of Americans and 79% of Europeans Say Their Economy Hasn’t Improved in the Past 12 Months, and 10% or Less Have Confidence in Government to Fix Things, Says New AlixPartners Survey
The ‘citizen consumer’ on both sides of the Atlantic plans to reduce spending, as a combined 71% of respondents see their economies not improving in 2014
NEW YORK--(BUSINESS WIRE)--Though there was a note of increased economic optimism among the business and government elites attending the World Economic Forum in Davos, Switzerland, last week, a new survey from AlixPartners, the global business advisory firm, shows that among average citizens across the Western world confidence is flagging in both their economic outlook and their faith in government to improve things economically. According to the survey, 63% of Americans and 79% of Europeans believe their economy has not improved in the past 12 months, and just 9% of Americans and an average of only 10% of Europeans across five major countries (the UK, Germany, France, Italy and Spain) have confidence that their government will take effective actions to restore the long-term health of their respective nation’s economy.
“And while there are examples today where policy coordination and business execution appear to be working quite well, such as in certain sectors of the German economy, that’s not the case in general – and until that changes, American and European consumers are likely to remain stuck in their foxholes.”
Indicative of this prevailing lack of optimism, 71% of all surveyed internationally said they see their local economy staying the same or getting worse over the next 12 months.
“This survey suggests that everyday citizens, who control around 70% of spending in Western economies, are in no mood and in no position to be an engine of growth that business so badly needs right now,” said Fred Crawford, CEO of AlixPartners. “The ‘citizen consumer’ is perhaps even more banged up, fed up and hunkered down than many had thought – which could mean continued challenges for businesses, of all sorts, going forward. While there may be reasons for a modicum of optimism today, there also appears good reason to believe that the Western world will be stuck in a low-growth mode for some time to come.”
The results of the AlixPartners U.S. and European Economic Outlook, which polled a representative selection of more than 6,000 adults in the six countries, points to a continued sluggishness in consumer spending, with many making new year’s resolutions to remain cautious with their pocketbooks. For instance, among all those surveyed internationally, the following percentages said they expect to spend the same or less in the coming year on these items:
- Personal-care items, 91%
- Restaurants, 90%
- Leisure activities, 90%
- Clothing, 88%
- Personal savings and investments, 88%
- Major home improvements, 87%
- Vehicles, 86%
- Groceries, 80%
Among US-only respondents, the corresponding percentages were:
- Personal-care items, 89%
- Restaurants, 88%
- Leisure activities, 87%
- Clothing, 84%
- Personal savings and investments, 84%
- Major home improvements, 86%
- Vehicles, 83%
- Groceries, 72%
Sixty-three percent of all surveyed (47% of Americans and 66% of Europeans) claimed that they felt either “not good” or “bad” about the economic situation in their country. Compared to a similar AlixPartners survey taken in 2010 in the immediate aftermath of the global financial crisis, the number of Europeans holding this generally negative view of their country’s economy actually has crept up by two percentage points, to 66%, while in the U.S., although those percentages improved somewhat, those who say they feel “good” or “great” about the economy in this year’s survey number just 21%, down a percentage point from 2010’s survey.
Meanwhile, looking at the year ahead, making up the 71% of respondents across all six countries who said they don’t see the economy getting any better in the year ahead were subsets of 59% of Americans and a whopping 73% of Europeans who feel that way. Of note, a total of 22% of Americans and 28% of Europeans surveyed said they think the economy will actually get worse in the next 12 months.
While preoccupied with the perceived sluggishness of their economies, people surveyed across both continents seem to lack confidence in the ability of government to improve the economy. According to the survey results, only 9% of Americans and just 10%, on average, of Europeans are “somewhat” or “extremely” confident in the ability of ''elected officials to take effective action regarding the long-term health'' of the local economy. Within the euro-zone countries surveyed, this skepticism was particularly marked in countries having recently experienced recession or persistently low growth levels, such as France (with only 7% showing confidence) and Italy (at 6%), whereas their northern neighbor Germany was the least affected by this phenomenon among the surveyed European countries, with 19% holding some degree of confidence in their government to improve matters economically.
“Government and business are, of course, interdependent,” said Crawford. “And while there are examples today where policy coordination and business execution appear to be working quite well, such as in certain sectors of the German economy, that’s not the case in general – and until that changes, American and European consumers are likely to remain stuck in their foxholes.”
“But businesses, of course, can’t afford to wait. In our work at AlixPartners, we see companies expanding even in today’s low-growth environment. They’re creating value by pulling on key levers available to them, including advanced product- and pricing-profitability techniques, targeted data analytics, flexible and responsive supply-chain strategies and, of course, talent acquisition and development. In today’s low-growth world, no stone can be left unturned in the search for value.”
About the Survey
The AlixPartners U.S. and European Economic Outlook was conducted between January 14 and 18. The previous survey edition was conducted in September 2010. AlixPartners surveyed a selection of 6,042 adults over 18 in six countries (United States, United Kingdom, Germany, France, Italy and Spain), representative of each country’s population across key demographics and income ranges. The survey’s key areas of focus include: general consumer sentiment about the economy of their home country, expectations for their country’s economy going forward, sentiment about personal financial situation, and purchase behavior for the past year and expected for 2014.
AlixPartners is a leading global business-advisory firm of results-oriented professionals who specialize in creating value and restoring performance at every stage of the business lifecycle. We thrive on our ability to make a difference in high-impact situations and deliver sustainable, bottom-line results. The firm’s expertise covers a wide range of businesses and industries whether they are healthy, challenged or distressed. Since 1981, we have taken a unique, small-team, action-oriented approach to helping corporate boards and management, law firms, investment banks and investors respond to critical business issues. For more information, visit www.alixpartners.com.