Consumer confidence: what motivates each income bracket – 09/15/2023 – Market

The prospect of economic growth, with relief in prices and job opportunities, boosts the optimism of lower-income consumers in Brazil, while the drop in interest rates gives greater encouragement to the richest families.

This is what a survey by FGV Ibre (Brazilian Institute of Economics of Fundação Getulio Vargas) indicates on the reasons for the recent improvement in family confidence in the country’s economy.

The survey was prepared with the inclusion of questions in the consumer survey carried out by the institution in August.

In general, when they were able to cite different factors that contributed to the improvement in expectations, interviewees mainly mentioned the downward trend in interest rates (50.6%) and the good prospects for economic growth (48.4%).

The picture, however, varies according to income groups, considers the research. In the so-called range one, whose monthly family income is lower (up to R$2,100), the good prospects for economic growth were cited by 41.7% of those interviewed.

This is the highest percentage found in this group. Relief in the prices of consumer items (36%) and improved expectations for the job market (35%) followed.

In range two, with family income from R$2,100.01 to R$4,800, economic growth prospects also led the responses (49.7%), followed by the job market (42.4%) and price relief (38.6%).

The expectation of a fall in interest rates occupied the top of the responses in income brackets three (57.7%) and four (73.6%). They are the richest sections of the population in the survey. Family income ranges from R$4,800.01 to R$9,600 in range three and is above this level in range four.

“People with higher incomes can buy more expensive goods, which can be paid in installments, such as a car or property. The interest rate is very embedded in this type of purchase”, says economist Anna Carolina Gouveia, one of the researchers at FGV Ibre responsible for the survey.

“For lower-income consumers, the main factor is economic growth. This is closely associated with the recent price relief, which impacts the consumption basket, and the gradual improvement in the job market,” he says.

At another point, the survey asked consumers to cite just one reason for confidence in the coming months. In this section, the highest percentage of responses, considering all interviewees, was related to the government’s economic policy (23.3%).

The survey, however, considers that this assessment was not consensual, as it did not reach such a significant level.

“There is a convergence towards confidence in the government’s economic policy, but it is not a result that attracts as much attention. It was responded to by just over 20% of consumers”, says Gouveia.

“It’s not such a large percentage, below comes the expectation of a drop in interest rates [19,6%] and good prospects for economic growth [15,8%]”, he adds.

Dividing consumers into groups, trust in the government’s economic policy was the most cited option in income groups two (20.9%) and three (30.1%).

Meanwhile, price relief was the most cited factor (25%) among lower-income consumers (range one). Among the richest (range four), the drop in interest rates stood out (30.5%).

The August survey also included a question about how the prospect of reducing interest rates in the coming months could benefit the financial situation of families. In this regard, the interviewee could select as many options as they wanted.

The answer mostly chosen by those interviewed assesses that the drop in interest rates could generate better prospects for jobs and salaries, given the possible increase in investments by companies. This option was selected by 61.9% of total consumers and is widespread among different income groups.