The energy crisis and inflation in Germany are pushing consumer sentiment to a new record low. The barometer of the GfK market researchers in Nuremberg signals a surprisingly sharp drop of 5.7 points to minus 42.5 points in October. It falls for the fourth time in a row and at the same time to the lowest level since consumer sentiment was surveyed for Germany as a whole in 1991, as GfK announced on Wednesday. Many households are currently being forced to spend significantly more money on energy or set aside for noticeably higher heating bills. “Accordingly, they have to save on other expenses, such as new purchases,” said GfK consumer expert Rolf Bürkl. “This is causing the consumer climate to fall to a new record low.”
The currently very high inflation rates of almost eight percent led to large real income losses among consumers and thus to a significant reduction in purchasing power. “Since it is not foreseeable at the moment when inflation will noticeably weaken again, difficult times are ahead for the consumer climate in the coming months,” warned Bürkl.
Retail suffered particularly badly during the Corona lockdown
The industry association HDE already sees the retail trade in a dilemma. “Customers are buying less or cheaper, while at the same time energy prices are skyrocketing for companies,” said HDE Managing Director Stefan Genth. “Simply passing on the price increases to customers doesn’t work in this situation in the tough competition.” That is why the federal government must quickly adapt its aid programs for companies overwhelmed by energy costs so that retailers can also receive support.
No mood swing in sight
There is great uncertainty as to how long the energy crisis will last and how expensive it will ultimately be, said Jörg Zeuner, chief economist at Union Investment. As is so often the case in uncertain situations, the “savings reflex” now sets in for the consumer. “An icy wind will blow in the face of consumption in the coming winter months – even if the temperatures remain above average and a gas shortage can thus be prevented.” Alexander Krüger from the private bank Hauck, Aufhäuser Lampe sees it that way. “”Looking into the wallet has let the desperation of consumers get out of hand.” The ice age in consumer mood will continue. “A change in mood is in nirvana.” The problem is that there is no light at the end of the tunnel. “The rumoring of the government regarding faster relief is becoming less and less understandable,” criticized chief economist Krüger.
The GfK sub-index of what is known as the propensity to buy has fallen for the eighth time in a row. The barometer fell to its lowest value since October 2008 and thus at the time of the financial and economic crisis. “For consumers, a recession is becoming more likely.” Companies and private households were worried about the explosion in energy costs.
The Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans Böckler Foundation expects private consumption to collapse in 2023. Household spending is likely to fall by 2.5 percent due to the high inflation and thus more sharply than at any time since the Corona year 2020.
The leading economic research institutes also assume that Germany will not be able to prevent a recession in the winter. The government advisers expect the economy to bottom out due to the energy crisis and then shrink, as the Reuters news agency learned from several people familiar with the matter. That is why the economists have massively cut their spring forecast. For this year, the experts expect economic growth of only around 1.4 percent and for 2023 a decline in gross domestic product of around 0.4 percent.
Those were the days…. The DAX reaches the 16,000 point mark – in August 2021
DAX continues unabated descent
Of the German stock index (DAX) remains in a downward spiral due to inflation, interest rate and economic worries. For the first time since November 2020, the leading German index fell below the 12,000 point mark on Wednesday, which is of great psychological importance. At lunchtime, the leading index lost 1.84 percent to 11,916.55 points. The MDax fell by 2.86 percent to 21,702.52 points and the Eurozone leading index EuroStoxx 50 lost 1.8 percent in value. “There is a risk of another week of horror trading,” said market observer Timo Emden.
So far, the DAX has lost more than three percent again this week. Since the intermediate high a good two weeks ago, it has already lost more than twelve percent. There were heavy price losses in the banking sector, as shown by the more than seven percent minus for the Deutsche Bank papers as the DAX tail light. Things looked even bleaker in the steel sector because of an industry study by the US bank JPMorgan, which was pessimistic about profitability in the carbon steel sector. Thyssenkrupp shares fell 11.4 percent after analyst Luke Nelson confirmed the rating underweight resumed. For the Salzgitter Group, which is more strongly focused on steel, the price slide even amounted to almost 14 percent.
hb/tko (rtr, dpa)
