(1)

Credit Crunch Tracking

May 2010

Avoiding Recession 2.0

(2)

Positive trend of improving consumer confidence over past year has slowed – mainly driven by the situation in Greece/the Euro-zone.

Fear of a “Recession 2.0” exists and has led to a pause in future spending intentions.

Caution among Consumers...?

(3)

Positive Trend in Outlook for Irish economy has slowed since February,but remains well ahead of last year

(4)

38 39 3235 29

40 4129 17 21

9 718

21 231 1

21 2

Much better (5)

Much worse (1)

Average

Stay the same (3)Slightly better (4)

Slightly worse (2)

1.92

12

1.88

11

2.32

18

NET Same/Better (3-5) 22 19 38

How do you expect the Irish economy to fare in the next 6 months?

May‘09%

July‘09%

Oct‘09%

2.54

26

48

Feb‘10%

2.57

51

May‘10%

26

Positive trend in expectations to Irish economy have slowed!

Half the population still expect the Irish economy to fare worse over the next 6 months.

But 1 in 4 expect the economy to improve over the next 6 months.

(5)

Higher expectations seen among the youth, the retired and those born outside of Ireland.

(6)

Expectations for the Irish economy 6 months from now % Stating they believe it will be the same or better (3-5)

51 5249

56

4547

5350

52 5248 49

56

18-34%

35-44%

45-64%

AGE

65+%

Any%

None%

CHILDREN

Male%

Female%

GENDER

ABC1%

C2DE%

SOCIALCLASS

TOTAL%

COUNTRY OF ORIGIN

Ireland%

Other%

Change since

Feb ‘10+3% +3% +2% +3% +0% +5% +2% +2% +5% +5% +0% +3% -1%

Highest increase in consumer confidence among those with children, lower social classes and 45-64 year olds.

(7)

A less positive outlook for the World economy, has held the positive Irish outlook in check.

(8)

33 3421 17 21

15 11

85

8

31 3144

53 433 2

5

56

Much better (5)

Much worse (1)

Average

Stay the same (3)

Slightly better (4)

Slightly worse (2)

NET Same/Better (3-5)

2.72

16

2.77

18

3.18

19

50 51 68

How do you expect the World economy to fare in the next 6 months?

May‘09%

July‘09%

Oct‘09%

3.36

20

78

Feb‘10%

3.17

22

71

May‘10%

Expectations for the World economy have declined.

Almost 1 in 3 believe the World economy will fare worse in the next 6 months.

But more than half still expect the World economy to improve.

(9)

11

19

10

26

24

14

33

13

I am worried that the situation in Greece and other Southern European countries could cause another downturn in the Irish economy

I think that the worst is over for the Irish economy and that it will only improve going forward

Less positive World outlook clearly impacted by the situation in Greece

Strongly Disagree(1)%

(2)%

Strongly Agree(5)%

(3)%

(4)%

28

22

(10)

Positive trend for housing and job market have also slowed... though fewer believe it will get worse!

(11)

44 40 3735 32

37 38 3639 36

21 22 19 13 1342 40

28 21 21

15 15

7 712 12 14

2 2

1 2

11 12 15 211

2 22

Much better (5)

Much worse (1)

Average

The Housing Market 6 months from now?

Job security 6 months from now?

2.29

Stay the same (3)

Slightly better (4)

Slightly worse (2)

1.85

20 11

2.32 1.89

23 14

2.43

26

2.24

20

NET Same/Better (3-5) 33 1937 2243 34

2.59

36

53

2.34

27

40

May‘09%

July‘09%

Oct‘09%

Feb‘10%

May‘09%

July‘09%

Oct‘09%

Feb‘10%

How do you expect the Housing and Job markets to fare in the next 6 months?

2.60

55

May‘10%

2.39

42

May‘10%

38 27

(12)

The problems for the Greek economy and other EU states, has had an impact on how people feel the recession will impact on them personally

(13)

22 2839 29

4731

39

16 1911

1410

169

High impact (8-10)

Limited Impact (1-3)

Expected Personal Impact of Recession - Overall

Average 5.7

May‘09%

5.8 6.6

Feb‘09%

Sept‘08%

6.1

July‘09%

7.0

Oct‘09%

Some Impact (4-7) 58 51 48 55 44

6.0

Feb‘10%

53

2 in 5 now believe that the recession will have a high impact on them personally.

Less than 1 in 10 believe that the recession will have no impact on them personally.

6.7

May‘10%

51

(14)

31 30 31 3230

34

21

26

3634

28

39 39 3942

48

37

26

36

4145

36

18-34%

35-44%

45-64%

AGE

65+%

Any%

None%

CHILDREN

Male%

Female%

GENDER

ABC1%

C2DE%

SOCIALCLASS

Expected Personal Impact of Recession – Net High Impact (8-10)

TOTAL%

The biggest change in impact appears to be among younger families who have become far more negative about the impact of the

recession

May‘10

Feb‘10

(15)

Decreased optimism leads to an increase in perceived impact of recession on monthly spending, lifestyle and job security.

(16)

24 28 36 30 43 31 4121

2131 24 38

2633

1517

2316

212021

2419

1518

162121

Monthly Spending

Average

Your Way Of Life

5.6 5.35.7 5.46.2 5.95.9 5.66.7 6.4

High impact (8-10)

Limited Impact (1-3)

Some Impact (4-7) 54 5348 5641 4951 5541 45

May‘09%

Feb‘09%

Sept‘08%

July‘09%

Oct‘09%

May‘09%

Feb‘09%

Sept‘08%

July‘09%

Oct‘09%

5.9

49

Feb‘10%

5.6

51

Feb‘10%

Expected Impact of Recession on….

6.5

43

May‘10%

6.1

50

May‘10%

(17)

24 2332

2431

24 30 2632 34 30 46

3544

36 3827

3726

40 35 30 28 2519

2721

36

Average

Full-time Workers Part-time Workers

5.0 5.14.7 5.45.6 5.74.9 6.55.6 5.7

High impact (8-10)

Limited Impact (1-3)

Some Impact (4-7) 39 3637 3840 3638 4440 34

May‘09%

Feb‘09%

Sept‘08%

July‘09%

Oct‘09%

May‘09%

Feb‘09%

Sept‘08%

July‘09%

Oct‘09%

4.7

34

Feb‘10%

5.7

34

Feb‘10%

Job security has decreased among both full-time and part-time workers...

5.2

33

May‘10%

6.5

33

May‘10%

(18)

The negative outlook on the World economy combined with increased fear of being hit personally by the recession has reduced any further increases in spending

(19)

63 6473

63 67 70 68 6574

62 6471

13 12 11 11 8 10 12 13 1320 16 14

19 1812

1916 12

16 169

13 1510

4 64

57 6

3 44

3 53

Already increased

Not likely to increase

Entertainment such as going out, eating, drinking or

socialisingGrocery spend

Consumer goods and services – e.g.

hairdresser, clothes, mobile

phone, gaming etc.

Holidays and short

breaks

Likely to increasein next 6 months

Likely to increasein next 12 months

Oct‘09%

Feb‘10%

Oct‘09%

Feb‘10%

Oct‘09%

Feb‘10%

Oct‘09%

Feb‘10%

Likelihood to increase spend in...

All product categories impacted by negative global outlook.

May‘10%

May‘10%

May‘10%

May‘10%

(20)

% Likely to increase spend in next 12 months

EntertainmentGrocery Spend

Consumer Goods/

Services

Holidays/ Shorter Breaks

Total 27 28 25 28

Gender

Male 26 26 27 29

Female 27 31 24 27

Age

18-34 41 38 36 40

35-54 22 27 22 23

55-64 14 15 15 24

65+ 15 20 15 15

Social Class

ABC1 27 25 25 33

C2DE 27 31 27 25

But, younger age groups and higher social classes are most likely to increase spend again...

(21)

When increased spending occurs, this is more likely to affect everyday shopping rather than luxury items or going out

(22)

17

21

22

39

14

9

20

10

I have started to treat myself/my family more than 6 months ago, for example when buying clothes or going to restaurants more often

I have relaxed my shopping around and have reversed a little to my old shopping habits before the recession

Focus on everyday shopping when increasing spend rather than ‘treats’...

Strongly Disagree(1)%

(2)%

Strongly Agree(5)%

(3)%

(4)%

20

26

(23)

Summary...

• The positive upward trend in consumer confidence appears to have slowed – driven by a more pessimistic outlook for the World economy.

• This appears to have been as a result of the more recent problem for Greece and other Euro-zone states

• Although there are signs that some increases have come already, consumer fears of the impact on Ireland and themselves, appear for the moment to have led to an reluctance towards further increases.

(24)

Summary...

• It is crucial that the situation in the Euro-zone is solved quickly and decisively – and Ireland’s own position defended strongly by politicians and the media to reassure consumers and regain momentum.

• The immediate reaction to bad news among consumers, shows again the precarious nature of current growth in the market place.

• Industry needs to continue to work hard to reassure consumers that we are on ‘the road to recovery” in order to avoid “recession 2.0”.

(25)

Methodology – RED Express

• 1,000 telephone interviews (CATI) using a random digital sample to ensure coverage of all households, including ex-directory.

• Quotas were set and data weighted to ensure a national representative sample of the population aged 18+ years.

• This is the 8th wave of the credit crunch tracking – fieldwork was conducted 24th – 26th May 2010.