Depressed Consumption Psychology

The consumption psychology continues to decrease for 3 months in the third quarter (July to September).

Because the consumption led a growth of Korean economy since a financial crisis, the rapid cooling of the consumption psychology could produce an anxiety about the economy of the next year.

On October 14, Korea National Statistical Office (NSO) announced that the consumer expectation index and the consumer survey index (CSI) of September decreased continuously for three months and showed the lowest point a year.

The consumer expectation index of September slid to 103.9 decreased by 2.3 points over the last month and decreased by 6.7% over June.

It indicates there are large consumers who feel that the economy prospect will be discouraging after a half year, in the second half of the year.

Especially, the consumer expectation index of September was dropped over one month before from all income levels and ages levels, and dropped to 95.1 in the level of less 1 million won of monthly incomes.

In terms of the consumer expectation index of September by section, there were 97.2 for the field of Consumer Durable Goods including a motorcar and home appliances, △105.9 for the business condition. △104.5 for living conditions, △107.5 for consumption expenditure, and △98.2 for entertainment, culture and eating-out.

Compared with six months ealier, CSI which shows the evaluation of the current economy and living conditions, suddenly dropped to 97.2 in September from 102.1 in August.

The business index dropped to 100.8 from 108.0 in August, and the living condition idex dropped to 93.7 from 96.1.

The analysis said that the consumption psychology has been frozen up because the income has decreased. Compared with one prior to one year, the average household income index decreased to 97.8 from 98.8 in August.

The households that have large savings decreased to 12.5% in September from 12.7% in August. On the other hand, the households that increase the debts increased to 15.8% from 14.9%.

Besides price of real estates, the level which has the house and land(real estate) has increasing property, but the level which has the financial assets has the decreasing property.

The current asset value valuation index compared to one prior to six months, showed △104.8 for housing and shopping district △101.3 for lands and forests △97.6 for financial savings, and △80.6 for stocks and bonds.

It is the index of consumer expectation psychology for the business, living condition and consumption expenditure of six months after. When the index is less than 100, it means there is more optimistic prospect than pessimistic prospect.

Kwang-Am Cheon iam@donga.com