Consumers to remain upbeat despite asset price falls

On the face of it, the recent sharp fall in equity prices and slowdown in the housing market suggest that the significant improvement in consumer confidence seen over the last year might be reversed soon.

But other developments – such as the easing of the real earnings squeeze, strong employment prospects and the persistence of record-low interest rates for a while longer – look set to provide considerable offsetting support to sentiment. Accordingly, we doubt that consumer confidence is about to suffer an abrupt correction.