Daily Research News Online no. 3990 - Economic Outlook: US Confidence, Worldwide Views of Retirement

Economic Outlook: US Confidence, Worldwide Views of Retirement

April 18 2005

Fewer US consumers are now confident about the strength of their economy, according to the BIGResearch Executive Briefing for April. Domestic issues are the main worries. Looking longer-term, separate research from Ipsos-Insight suggests that many consumers around the world have written off public pension sources as their retirement mainstay.

US Consumer Confidence

In the research by BIG, 43.2% of US citizens said they were very confident/confident about the strength of the economy compared to 45.2% last month and 46.7% last year. However, this is still well up on April '03 (31.6%).

Domestic issues (unemployment, rising gas prices and social security) dominate the mood, with fewer than 1 in 5 (17.6%) saying they are worried about political and national security issues, down from 21.3% last month and the lowest since February '04. Employment is a growing concern and a slightly higher proportion (5.5%) fear being made redundant than last month (4.9%).

Rising gas prices and disappointing March retail sales are also making investors cautious. Only 41.2% say that prices at the pump are having 'no major impact' on their spending, well down on March's 48.7%. Resulting cutbacks include decreasing vacation travel, delaying a major purchase (car, TV, furniture), dining out less, and use of car pools.

The BIG Executive Briefing is based on BIGresearch's Consumer Intentions & Actions Survey, which monitors over 8,000 consumers each month. April findings are based on respondents surveyed from April 6th to 13th. The company is online at www.bigresearch.com

Worldwide Expectations for Retirement Income

The Ipsos survey found that Americans are not alone in losing faith in public pension sources. Large majorities are in agreement from Australia and South Korea to Mexico.

The agency's global reporting service, World Monitor, surveyed adults in 11 countries-Australia, China, France, Germany, Italy, Japan, Mexico, Spain, South Korea, the UK and the US - in late 2004. Respondents were asked to choose the most likely from a variety of possible sources from which their retirement might be funded: a pension from the government, a private pension from company/employer, personal retirement savings, support from children or relatives, or ownership of a house, land, or real estate.

Americans are the least likely to expect their public Social Security system to see them through retirement, and are among the most likely to expect to draw on their own savings. Only 17% named public pensions as their likely first source of income.

Europeans are the most likely to count on having a government pension for their old age, but younger people are less likely to feel this. A majority of Spaniards (67%) and Italians (56%) and half of Germans (49%) mentioned public pensions as their single most likely source of support. In France only 40% agreed and in Britain only one third (34%). The under-35-year-old age group in Europe were 3 times as likely as were those aged 55+ to mention retirement savings first (21% vs. 7%, respectively).

Despite their utterly different economic heritage, China (51%) and Japan (46%) are alike in having a high proportion mentioning public pensions first, whereas in Korea the proportion was only 19%, the same as the figure for Australia.

Houses and real estate are not generally perceived as primary retirement assets, even in markets with strong recent surges in house prices, such as Australia. The tradition of Asian families caring for their elderly is not reflected in ratings for this source either: just over 1 in 20 (6%) of urban Chinese and hardly any Japanese expect their family to be their primary support in their later years.

Doug Cottings, Senior VP and Head of the Financial Services Practice at Ipsos-Insight, says there is 'an opportunity and a real need for financial institutions to step up and help people plan. Factors like longevity, health costs, and interest rates will all affect the amount of funds people will need to accumulate prior to retirement-and financial institutions can play an important role in helping the public understand these'.

Ipsos used its World Monitor survey to gauge opinion in the eleven countries between the dates of November 12 and December 10, 2004, interviewing urban samples in-person in China and Mexico and national samples by telephone elsewhere. Most countries have sample sizes of 500, with 1,000 in the US. More details of the survey are at www.ipsos-na.com/wm.cfm