Household Consumption Rapidly Cooling

Consumption psychology has been rapidly worsening.

According to the National Statistical Office¡¯s consumer prospects for September, the consumer estimation index, which shows the present consumption psychology of households, was 80.8 compared to six months ago, a record low after February 1999 recorded 84.4. The index stood at 96.4 last month, but dropped by as much as 16.4 points in one month.

The consumption plan index, showing business, living condition and spending plans after six months, also nose-dived. The consumer expectation index, showing the consumption psychology in the days to come, plunged to 90.9 last month, the lowest score since 86.8 was recorded in December 1998.

A consumer expectation index of 100 shows a balance between the households planning to increase consumption and those seeking to reduce it, but points below 100 mean that households planning to curtail spending outnumber those intending to increase it.

The expectation index showing the expectations for citizens¡¯ daily lives in the future also fell 10 points to 94.4 from the previous month. In particular, the consumption psychology for durable consumer goods such as TV sets, refrigerators, washing machines and automobiles cooled drastically. The ratings for spending on dining out, entertaining and cultural activities also weakened.

Meanwhile, the evaluation of assets owned by each household dropped remarkably. The evaluation index of stocks plummeted from 65.3 to 56.4, and that of financial assets, lands and houses also declined drastically compared to August.

Choi Young-Hae moneychoi@donga.com